PHOENIX—The word of the day was “opportunity” during the second full day of The Lodging Conference at the Arizona Biltmore in Phoenix.
Speakers representing brands and ownership companies during the general sessions all stressed that there’s room for everyone, from independent hotels to brands spanning all the chain scales, to take advantage of those opportunities.
Companies are homing in on strategies to help them capitalize on the still-high demand and revenue per available room growth environment, whether that means going asset-light or launching new and different brands.
The underlying theme driving the themes of opportunity and optimism is travel demand.
“I agree with (Arne Sorenson) when he says this is the golden age of travel,” said Michael Medzigian, chairman and managing partner of Watermark Capital Partners on the “A view from the C-Suite” general session panel.
Still, some issues loom over the North American hotel industry. These include rising labor costs, costs associated with construction (particularly in regions hit hard by recent weather events) and uncertainty around government and regulatory environments.
To cope with those challenges, the industry is staying on its toes. “If you’re complacent today, you’re dead,” said Kevin Frid, COO of North and Central America for AccorHotels. “We’re fortunate to be in a business where demand grows every year, but the competition does, too.”
Read on for more highlights from Day Two of The Lodging Conference:
Day Two recap video
Quotes of the day
“Our challenge domestically is to make sure we get our fair share of international travel. From the point of view of the U.S., (we need to) make sure we have safe, secure borders and also a welcome mat out for visitors.”
—Liam Brown, president, franchising, owner services and MxM select brands, North America, Marriott International, on what U.S. hoteliers should be concerned about today.
“Consistency … it comes down to understanding your demographics, who’s coming, and building relationships with your customers.”
—Ken Greene, president-Americas, Carlson Rezidor Hotel Group, during the “A view from the C-Suite” session.
“In many cases our labor costs are moving faster than RevPAR. We have to find more technologies to pull down labor costs.”
—Michael Medzigian, chairman and managing partner, Watermark Capital Partners, during “A view from the C-Suite” session.
Tweet of the day
#LodgingConference at the @arizonabiltmore kicks off the general morning session (day 3) with a panel of presidents/CEOs @LodgingEvent pic.twitter.com/6bnzlqNy51 — The Miller Group (@millergroup) November 1, 2017
Data point of the day
A total of 52% of the U.S. hotel inventory is controlled by online travel agencies, said Greg Mount, president and CEO of RLH Corporation.
Editors’ takeaways
Hotel investors aren’t exactly jittery, but like always, they’re looking over their shoulders. It’s in their blood to be nervous—as the millions and millions of dollars invested could be at risk at any minute. Look back to the last two downturns and you can see why—the hotel industry rarely knows what external event will cause major upheaval to its business.
“I don’t have unbridled enthusiasm,” said Michael Medzigian, chairman and managing partner of investment group Watermark Capital Partners, during Wednesday morning’s “A view from the C-Suite” general session. “There’s high demand, but we don’t have pricing power.
The bid-ask gap is widening again as sellers are looking for top dollar for assets—many of which have been renovated in the last few years. That, of course, leads to fewer turnaround opportunities even though there are still many hotels that can be improved with better operating techniques.
Hotel operators, on the other hand, are still on cloud nine. They walked around The Lodging Conference with a sense of confidence. While average daily rates might have peaked in most markets, occupancy remains steady, and RevPAR growth looks to bounce along at around 2%.
The leaders are realistic—as AAHOA Chairman Bhavesh Patel said, the future remains up in the air. Tom Magnuson, CEO and co-founder of Magnuson Hotels, reminded everyone that the industry is more splintered than ever to suit consumers’ preferences.
Even though the two sides represent different ends of the spectrum, it’s great to see there’s no panic. The general feeling is that construction remains in check, for the most part, and more travelers than ever are staying in hotels. That equation leads to a strong industry that only needs to make sure it has plans in place to be nimble when required to respond to any disruption from the uncertain global environment.
—Jeff Higley, Editorial Director
@jeffhigley1
Brands really are the focus of The Lodging Conference when it comes to general session panels. Over the last two days, we’ve heard from executives from most of the major North America-based brands, along with some influential hotel owners sprinkled in. In every conversation, the topic of brand oversaturation comes up. It’s interesting to hear that debate between brand folks and owners about whether or not there are too many brands—particularly at a conference where lots of splashy attention is given to new brand launches (this year, it’s IHG’s Avid Hotels that has a big display in the central courtyard of the Arizona Biltmore).
Brand executives invariably talk about pent-up demand and untapped opportunity, but I’m not so sure. Owners temper those conversations with a much-needed dose of realism. AAHOA’s Patel made a great point when he said, “we look at the market first. There are so many brands out there and new brands popping up every day, so we have to do our due diligence to see what fits in.”
Watermark Capital Partners’ Medzigian cut to the chase a little more bluntly when he said, “We have too many brands. Let’s be careful with that. It’s good for developers and good for brand companies, but I’m not sure it’s good for me as an owner.”
—Stephanie Ricca, Editor-in-Chief
@HNN_Steph
During a panel discussion for independent hoteliers that I sat in on today, panelists had an interesting perspective on loyalty. They talked about getting to know the guest, whether that's by talking to them personally or obtaining information via tech, and taking what you know about them to add what one panelist referred to as small touchpoints, such as putting a balloon in a room if you know it’s the guest's birthday.
I think a lot of talk around loyalty focuses on specific point systems or other programs, so it’s interesting independents look to some of those experiential touchpoints to keep loyal guests or turn customers into loyal guests.
—Danielle Hess, Reporter
@HNN_Danielle
*Correction, 2 November 2017: An earlier version of this story misidentified the speakers in a caption.