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The mood was upbeat and panelists and speakers were bullish on the prospects for the hotel industry reports hertelier correspondent Stacy Silver. The pandemic is a fading memory as earnings are well beyond where they were pre-COVID, Extended-Stay is the "hot" segment, limited supply growth and consumers looking for experiences are driving record demand and prices, plus awards and more from New York City this week...
Opening Session: CEO Check-In
Following a welcome from conference chairman and executive chairman of Loews Hotels & Co., Jonathan Tisch, the opening session, CEOs Check In: A View From The Top, moderated by CNBCs Sara Eisen, anchor of Closing Bell, included Keith Barr, outgoing CEO, IHG Hotels & Resorts; Sébastien M. Bazin, chairman/CEO, Accor; Anthony Capuano, president/CEO, Marriott International; Leslie D. Hale, president/CEO, RLJ Lodging Trust; Mark S. Hoplamazian, president/CEO, Hyatt Hotels Corporation; and Christopher J. Nassetta, president/CEO, Hilton. The overall tone: very bullish on the industry fundamentals.
Barr said, "Our industry faced more headwinds during the pandemic than any other industry, but now we have more tailwinds than any other industry." Bazin discussed how high prices are and the fact they are staying high with travelers seeking more experiential and local travel. Capuano pointed to Marriott's earnings calls discussing how they are well ahead of where they were pre-pandemic across all segments and geographies and sees no signs of a slowdown even with the current concerning economic headwinds. Hale pointed to the low supply growth and high demand allowing the industry to push high ADR. Hoplamazian discussed how group travel is returning, but leisure has led this recovery. Nassetta discussed how COVID was a "bizarro world" but sees demand patterns normalizing by the end of the year and, more importantly, discussed that China is a year behind us and expects the second half of 2023 for the US to see more inbound travel from China.
"I'm a Swiftie at 50!" said Tyler Morse, Chairman and CEO, MCR. "Taylor Swift will increase RevPAR in the United States by 1% this year."
Statistically Speaking with STR's Amanda Hite
Amanda Hite, president, STR, presented her updated 2023 forecast during the "Statistically Speaking" panel to a 5% RevPAR growth, 3.5% increase in ADR, and 1.6% increase in occupancy. The expected GDP decline during the second half of this year will affect the growth of our industry. She did note that new supply growth for 2023 is forecasted for only .6%, which is good news for those looking to build and better news for those operating if demand slows due to economic conditions. For 2024 STR is forecasting a 4.6% increase in RevPAR.
Doing Deals in Today's Market
The conversations on the 8th-floor lobby were about deals getting done and the current state of the liquidity market. Stephany Chen, EVP, Global Desk, JLL, said there are signs of the market picking up and has "heard there's kind of a meeting of the minds sort of kind of mentality right now between sellers and buyers." Sellers recognize the market is a bit challenging. Depending on the deals and the market profile, there's some sort of consideration to where we are today, and pricing becomes negotiation - a discussion point.
Over the next 24 months, a large portion of CMBS loans will be coming due. Chen said this would drive deals and transactions. Lenders in this environment have been more amenable to renegotiating or looking to extend and resolve these situations, especially since lodging fundamentals are so strong right now.
Extended-stay Segment is On Fire
Recently Hyatt, Hilton, Wyndham, and now Marriott have all announced new extended-stay brands in the segment. Kristen Knapp, Chief Investment Officer, Braintree Group, feels there is plenty of room to grow in the extended-stay segment. " There is a massive wave of construction and transient workers that are about to hit the road in the next couple of years, given the levels of federal funding that have yet to be realized. That, in tandem with consumer trends and the ever-increasing mobility of how people live and work, make this segment appealing to consumers." Stephany Chen noted the extended-stay segment is "very hot and lucrative right now from an investment perspective and an operational perspective."
"It's clearly an exciting time for the extended stay segment, as the demand for high-quality accommodations continues to soar," said Katherine Lugar, EVP Corporate Affairs at Hilton. She added that Hilton identified a clear opportunity to deliver a lower midscale extended-stay product custom designed for workforce travelers – a $300 billion global market. "These travelers represent professions like traveling nurses, military personnel, and more, who have a need for the flexibility of a long-stay product like what we will deliver through Project H3."
Melinda Griffith, Senior VP Business Development, Concord Hospitality, believes "the biggest challenge is how [the brands] will be positioned." The lower end of the segment positioning is clear, but we need to better define premium economy.
New Hotel Brands Announced
Sonesta announced the debut of two soft brands, Classico and MOD. Classico, positioned in the upper-upscale segment, blends local authenticity with global appeal. Each property will have a distinct identity and offer signature local cuisine, traditional high-touch service, and refined interiors. The first Sonesta Classico brand property is the 40-room Z Ocean Hotel in Miami, Florida's South Beach neighborhood, which opened on May 1, 2023.
MOD, positioned within Sonesta's upscale portfolio, offers guests flexibility by catering to their unique lifestyles and travel needs. Each MOD hotel will feature eclectic interior designs and amenities, such as curated food and beverage options. The first MOD property will launch as Hotel 11 in Calgary, Alberta, Canada.
Marriott announced its plans to launch a new brand, which has not yet been named but is currently referred to as Project MidX Studios. The affordable midscale extended stay brand is intended to deliver reasonably priced modern comfort for guests seeking longer stay accommodations in the US & Canada.
How Hotel Companies Use AI: a Theme Throughout the Conference
It was interesting to hear AI and ChatGPT being discussed throughout the conference, especially during the opening CEO session. Mark Hoplamazian acknowledged using it to look at potential colors for their new Hyatt Studios brand. During the session, Sara Eisen even asked ChatGPT who was the best hospitality industry CEO, and the answer returned as it is highly subjective.
Many companies are incorporating AI into their business right now. Katherine Lugar said, "AI presents an opportunity for [Hilton] to continue automating in ways that enable team members to better serve guests. This can happen in a variety of ways, from improved personalization in the booking and stay experience to automation of routine tasks that free up more time for personalized guest service. As a business of people serving people, you will continue to see Hilton prioritizing personal service that delivers reliable, friendly stays as our core offering while at the same time investing in innovation that makes these interactions more powerful."
We are all overloaded with content from social media and targeting campaigns. AI will make consumer searches for travel hyper-personalized and customized for both experiences and accommodations. –– Kristen Knapp, Chief Investment Officer, Braintree Group
Melinda Griffith, SVP Development, Concord Hospitality Enterprises, said Concord is interested in AI and will be using it. "Revenue management is a very big area where we can see that grow the most and the fastest. Also, in the area of customer satisfaction and gauging our customers, using AI will also be a really important tool for us." Kristen Knapp added that "We are all overloaded with content from social media and targeting campaigns. AI will make consumer searches for travel hyper-personalized and customized for both experiences and accommodations."
Awards & Events Surrounding NYU Hospitality Investment Conference
Gilda Perez-Alvarado, CEO, JLL Hotels & Hospitality, was recognized with the Arne Sorenson IREFAC Award. UJA Federation of New York raised almost $1.4 million at its Annual Event honoring Mit Shah, CEO, Noble Investment Group. Cornell University Nolan School of Hotel Administration held its 14th annual Icon and Innovator Awards. Award-winning restaurateur Danny Meyer, founder, executive chairman, and former Union Square Hospitality Group CEO, received the 2023 Cornell Hospitality "Icon of the Industry" award. Mia Kyricos, MMH '03, Chief Love Officer (CEO) of Kyricos & Associates, received the 2023 Cornell Hospitality Innovator of the Industry Award.