NEW YORK—Despite continued chatter about disrupters, the creeping advance of supply, concern for pandemics and political uncertainty abroad and, to a degree, in the U.S., the good news is there’s no really bad news for the lodging industry, judging by the still-smiling faces and confident outlooks found among the hundreds of hospitality executives at this year’s 38th annual New York University International Hospitality Investment Conference being held here at the Marriott Marquis through today.
Indeed, the conference’s traditional pulse-taking opening session, “The CEOs Check In: A View From The Top,” found its panelists describing the current lodging landscape as “The Golden Age of Travel,” with the industry outlook still reflecting a distinctly positive glow heading into the second half and beyond.
The panel, moderated by Kristin Lamoureux, associate dean and clinical associate professor, NYU School of Professional Studies of the newly renamed [at the conference’s start]Jonathan M. Tisch Center for Hospitality and Tourism, consisted of Stephen P. Joyce, president/CEO, Choice Hotels International; Christopher J. Nassetta, president/CEO, Hilton Worldwide, Richard Solomons, CEO, IHG; and Arne Sorenson, president/CEO, Marriott International, Inc.
Nassetta noted the industry tends to get “myopically focused on where we are in the cycle; every investor, every time we talk to media, it’s the game of baseball—what inning are we in in terms of where we are in the cycle. I think it belies the undercurrent of what’s going on in our business, which is that we are one of the largest employers, one of the biggest businesses in the world, one of the fastest-growing businesses in the world. We’re not technology, so it’s not as sexy and fun to talk about it; you don’t read about it the same way. But there’s tremendous opportunity.”
He added over the past 20 years the middle class has doubled and “over the next 20 years every expectation is that the middle class is going to double again.” Similarly, commensurate with that doubling, tourist arrivals have doubled, he said. “We’re now over a billion tourist arrivals internationally; the expectation is for that to double as well. If you look at lodging opportunity around the world, there are markets that are more mature, like the United States and to some degree, Europe. But it’s a big world and if you look at it on average, hotel rooms are significantly underpenetrated around the world almost in every market, particularly in the emerging markets relative to what you’re going to see in population growth and demand…forget about the next quarter or two; the next five, 10, 15, frankly, the rest of our lives for anybody in this room—all things being equal—are going to be fantastic in terms of what’s going to happen in travel and tourism, what’s going to happen in the hotel business,” said Nassetta.
Sorenson echoed Nassetta, pointing to the “massive numbers of new members of the middle class in the rest of the world who want to travel. If you look at young people in the United States, I think they’re probably more interested in collecting experiences than in collecting cars and houses. So that’s a really positive mega-trend, which we can, as an industry harvest and have a lot of fun with.”
He did, however, cite two trends to watch: the rise of nationalism, which, he suggested, “threatens the ability of people to move freely around the world,” and labor, which has a different dynamic in different parts of the world.
“When you look at the developed world, including the United States and Western Europe, you have a debate that is getting more and more pronounced about the quality of jobs and the quality of life that can be lived by those jobs. I think our industry has made enormous progress in the past five years. Five years ago, people would disdain the jobs that would be created; I don’t think that’s the case anymore,” said Sorenson.
IHG’s Solomons offered that technology continues to play a key role in helping advance the industry. “What it has done has reinforced something that we’re seeing in consumers generally: that consumers are becoming more knowledgeable, more understanding about value—not just price but value and more discerning. You see this proliferation of brands in our industry—we’ve all launched new brands in different segments. We’re seeing technology enablement with things like the Airbnbs of this world and different distribution channels. I think it comes back to what we stand for, certainly on this panel: it’s about understanding consumers, strong brands that deliver what they need… the other things then get informed by that: how to use technology, how do you actually tap into this growing demand, how do we make sure, certainly for our hotels, our owners, our brands we get more than our fair share. Because there’s no question that over time—absolutely—it’s a very powerful business that we’re in and we have to deal with the short term,” he said.
“We are sort of in a golden age,” observed Joyce. “There are not only young people coming up with a desire to travel; the Boomers, as they get more time on their hands, our view is they’re just going to travel all the time. The trend to travel is important.”
Another trend the Choice CEO flagged as important is shared services. “Five years ago, the number of people willing to accept a non-traditional lodging stay was like 6%; today, it’s 37% headed for 60%, which is one of the reasons why we launched vacation rental by Choice,” said Joyce. “They’re looking for different things than we’ve been offering. They’re our customers, why should we let them go someplace else? And how do we meet their needs because their needs have now gone beyond our typical lodging product. So we’re working with vacation rental management companies to try and do that,” said the CEO.
Also citing technology, Joyce stressed the idea of staying first with customers. “And making sure that you’re the one communicating with them and not some third party—if the customer wants reviews on your [web]site, put reviews on your site. If they need to go and do some ‘shopping’ to make sure they’re getting a reasonable deal, that’s fine,” he added.
Nassetta commented that “it’s hard to debate that it’s not the golden age of travel…you have a demographic tsunami, you have a psychographic tsunami which is you have a generation coming up, probably two generations coming up. It’s the Millennial generation that’s going to be the largest part of our travel population in the next 10 to 15 years and they’re really focused on experiences and traveling and seeing the world, interacting with people in a way that’s much more intense than the generation or two before them. You put those two together, those converge and create a very, very special elixir for travel and tourism for a very long time.”
“It absolutely is the golden age of travel,” said Sorenson. “I think you can pause though, because if you start this conference with a point of view that is: ‘What about RevPAR this quarter? Or what about RevPAR last quarter?’ If you define golden age of travel as that data point or current numbers, then it somehow feels like a disconnect. But if you look at all longer term, what you see is these demographic trends which are exciting.”
—Stefani C. O’Connor