NASHVILLE, Tennessee — Economists and analysts have been pushing back predictions and stretching out timelines for a recession. Most thought the U.S. economy would be in one by now, and a few have changed their minds completely, calling what's ahead a "soft landing," rather than a recession.

Adam Sacks, president of Tourism Economics, isn't one of those few.

During the opening general session of the 15th Annual Hotel Data Conference, Sacks said he still expects the economy to go into recession later this year or next. He just thinks it will be so mild that no one, at least in the travel and hospitality industry, is likely to notice much.

Tourism Economics partners with CoStar hospitality analytics division STR to forecast hotel industry performance, and the latest edition of that forecast has key performance indicators improving across the board, though lower growth is expected — in every hotel chain scale from economy to luxury — through 2024.

Hotel performance will continue to improve, even in a mild recession, because there is still desire to travel — for leisure and business — and international travelers who so far have stayed away will eventually return to the U.S., Sacks said.

But there are still some nagging concerns, according to Jan Freitag, CoStar's national director of hospitality market analytics. Those include plummeting office leases and office use as companies continue to embrace at least hybrid in-office and work-from-home policies.

"Outside of those of you who are in the office five days [a week], bless you, but are we back in the office ever again on Friday? I'm not sure. And I really think that's going to hurt us with occupancy," he said during a presentation on factors beyond the usual KPIs that are at play.

Freitag also said he doesn't expect a quick return of international travelers, especially not from China, to the U.S.

Everyone's "like, look, they're going to come back" to the U.S., he said. "But if you have a budget for 2023, early 2024 for the return of the Chinese traveler, I don't think so. Because as long as the Russian air space is closed, it's really hard to get here."

On the first day of the Hotel Data Conference, much time was devoted to reconciling continued optimism for travel and hotels with a murkier future view of the economy.
— Robert McCune, senior managing editor
@HNN_Robert

Listen below as HNN's Sean McCracken and Dan Kubacki talk with Kelsey Fenerty, STR's manager of analytics, about the performance predictions and data shared on the first day of the Hotel Data Conference.

The Hotel News Now Podcast Network brings timely audio interviews, industry opinion and analyst commentary about the global hotel industry to life. Find podcasts here or search for Hotel News Now on Apple, Spotify or wherever you listen.

"My general thought would have been that big hotels generally go after big whales, and most of the smaller groups end up at our midsized to lower-sized hotels or resorts. ... The big hotels are beating the small hotels to business, and they’re not doing it with big groups. They’re doing it with small groups, and they’re churning and burning them."
— Dana Cariss, vice president of revenue strategy and distribution, CoralTree Hospitality

“If you look across our portfolio … we are not seeing margins that we were seeing prior to the pandemic. Even though rates are much higher than what we’ve had in the past, we are not seeing that always flow down to the bottom line.”
— Christoph McLaughlin, vice president of asset management at Ashford Hospitality Trust, on profitability amid capital-expenditure increases, interest rate increases and more.

Through the opening general sessions, with Adam Sacks of Tourism Economics and STR President Amanda Hite sharing the updated 2023 U.S. hotel forecast and subsequent discussion, it increasingly sounds like a recession — if we even have one — will be spelled with a lower-case R and won’t affect the hotel industry as they have in the past.

I even heard during the "Wine Down with the Bosses" session that revenue per available room is expected to grow through the forecast recession.

The labor sector is too strong, both in terms of wage growth and unemployment. Inflation, though still around, is generally slowing down. Leisure travel, though normalizing, is still strong, and group and business-transient demand are coming back. Many Americans traveled overseas this year, but the expectation is that surge isn’t sustainable, and Americans will return to domestic trips in the not-too-distant future. International inbound travel hasn’t come back yet, but that’s another source of demand expected to come back. It sounds like the industry should weather the Recession Lite that’s built into the forecast, but with any luck, it’ll just be a topic of debate instead of a reality.
— Bryan Wroten, senior reporter
@HNN_Bryan

As we close out the first day of the Hotel Data Conference, I was pleasantly surprised to see and hear that every session included interaction with the audience, in the sense that attendees were eager to ask questions. They were engaged. They wanted to learn. They had thoughtful comments. To me, it felt like everyone was reenergized and ready to put new strategies in their playbooks for 2024.

That’s not to say folks aren’t still mildly worried about a recession as well as the drop in leisure demand and pain points associated with interest rates, insurance rates and hiring and retention. All those factors can be daunting.

But I like how Agnelo Fernandes, CEO of Cote Family Companies, explained it. He said the industry should think about the period we are in as a season that has 52 sports games. “We are not going to win all 52 games,” he said. Instead, hoteliers must take things week by week to help reset.

No more should the industry look back at 2019 as a benchmark, he said. He’s now using 2021 and 2022. This better aligns with the ways in which customers are changing. They have new booking behaviors, new spending habits and new needs.
— Dana Miller, senior reporter
@HNN_Dana

I’d hate to be the bearer of bad news, so I won’t be. Instead, I’ll pin it on my STR colleague, Brannan Doyle.

During Brannan’s panel, “Survey Says: Perceptions and Expectations Are Shifting,” he spoke about STR’s Hospitality Industry Sentiment survey, which polls both hotel and non-hotel personnel on their feelings surrounding hospitality industry topics.

The majority of respondents said that a potential recession has at least some impact on 2024 budget planning, and recession-related concerns such as reduced leisure demand, change in investments and air travel disruptions were top responses to questions about challenges on the horizon.

This doesn’t mean a recession is any closer to occurring, or that it would be a rough one if it does occur, but it’s more of a cautionary sign that it’s still on a lot of people’s minds. I’ve heard several people downplay its effects on the hotel industry and poke fun at its continual delay, but its presence is still in fact lingering.
— Trevor Simpson, associate editor
@HNN_Trevor

Read more news on Hotel News Now.