NEW YORK—If the lodging industry is going to hit the cyclical skids, it’s not going to be anytime soon, judging from the still-bullish attitudes and rampant enthusiasm exhibited by some 2,000 hospitality movers and shakers during the 37th Annual New York University International Hospitality Investment Conference held here at the Marriott Marquis earlier this month.
From sessions and workshops to networking receptions and the jam-packed public spaces, the overwhelming outlook by hospitality and financial executives still sees a lot of runway ahead to get deals done and be profitable.
“I think everybody in this room knows that we have a moment to be pleased and optimistic. By important metrics the travel industry continues to boom. Room demand, average daily rate [and]RevPAR increases each hit all-time highs last year and we certainly see more growth ahead,” said Jonathan Tisch, co-chairman of the board and office of the president, Loews Corp., and chairman/CEO of Loews Hotels.
Tisch served as conference chair for the 21st year at the event, which was hosted by Dennis Di Lorenzo, Harvey J. Stedman Dean of the NYU School of Professional Studies Tisch Center for Hospitality and Tourism, whose students benefit from scholarships from funds raised by the conference.
Out of the gate, the traditional “CEOs Check In” opening session, moderated by Katherine Lugar, president/CEO of the American Hotel & Lodging Association, pulled together a quartet of C-suite executives who were effusive in their outlooks for continued industry prosperity.
“The next few years are going to be exceptionally good years in this business—among the best years that we’ve seen,” said Christopher Nassetta, president/CEO, Hilton Worldwide. He noted with demand still outpacing new rooms supply and, coupled with a stable economy, the result “is going to be good things for our business.”
Mark Hoplamazian, president/CEO, Hyatt Hotels Corp., added, “Corporate profitability continues to grow [in the U.S.]at a rate actually in excess of GDP growth, and that’s driving a lot of business travelers. A lot of people were waiting around for group business to recover and—pay attention, in case you missed it—everyone, it’s back.”
Sébastian Bazin, chairman/CEO, Accor, remarked, “The demand for international travelers is going to be growing 4% to 5% further; and…supply, 2% to 3% maximum.” He felt that would leave the industry “OK” for the next several years.
Geoff Ballotti, president/CEO, Wyndham Hotel Group, LLC, pointed out the industry is in the 57th month of its cycle and “it’s feeling more and more like the cycle that began in 1992 and ended in 2000… You still only have to look at our domestic pipeline and where it’s at—450,000 rooms—and compare it to where it peaked at the turn of the last cycle to realize that this cycle has a long way to run.”
The bullish outlook permeated many of the other sessions.
In the “Titans of Real Estate” session Barry Sternlicht, chairman/CEO, Starwood Capital Group, observed, “It’s a good economy. It is stronger than the numbers suggest.”
Jonathan Gray, global head of real estate, Blackstone, addressed oversaturation in certain urban areas. “There are some markets where we’re beginning to see more supply and lower RevPAR growth. Whenever we see advanced new supply, that’s where we’ll be a little more cautious,” he said, specifically citing Miami and New York.
Both executives saw plenty of runway ahead for foreign money coming into the U.S. hospitality market.
“They’re underweighted [in the U.S.]. Their first stop would be major cities, such as New York or Los Angeles, but it’s the early part of that trend. For them, it’s long term, they’re not trying to catch the market,” said Sternlicht.
“I think it’s early days in terms of foreign or Chinese investment,” added Gray.
Executives examining “Boutique Hotels: Sustainable Asset Class or Bridge to the Big Brands?” debated classification of properties in the segment.
Joseph Long, managing partner, KHP Capital Partners, noted while boutique hotels are typically found in urban locales, they’re expanding to resort destinations. “There’s legs to it beyond where it’s been,” he said.
Eric Danziger, president/CEO, Debut Hotels, said, “If you’re staying on theory that lifestyle can apply to any traveler, it can be in Tulsa or Tuscaloosa.”
“It’s a global proposition, no doubt,” added Oliver Bonke, chief commercial officer, Americas, IHG. “With this space lending itself to gentrification, there are a lot of parts in cities in the U.S. that you would probably struggle with some of our more hard-coated brands.”
Patrick Denihan, CEO, Denihan Investments, Denihan Hospitality Group, expressed doubt the same experience could be delivered at a 900-key hotel and at a smaller one. Todd Wynne-Parry, EVP, Commune Hotels + Resorts, noted the company “gets itchy” past 250 rooms, as larger than that means meeting space. “Now, you look like everybody else,” he said.
Long pointed to the W and Kimpton brands, noting each has properties with 400-plus rooms. “I don’t think anyone would say [they’re] not boutique style,” he said. “At that size hotel, you need to do group. When you’ve got large groups in a hotel, it fundamentally changes the dynamic of the interactions. It can be done, but it’s harder.”
At the “Resorts Redefined” session, the growing popularity of resorts, including all-inclusives, was discussed.
“We are able to deliver a deluxe room product at an affordable price and a fantastic experience,” said Bruce Wardinski, CEO of Playa Hotels & Resorts, but noted he wouldn’t try to make AIs work domestically.
David Palmer, president/CEO of Diamond Resorts International, noted his company has taken the sales process and turned it into a hospitality experience as a way to market its vacation ownership properties, which yields about a 30% purchase commitment.
During the “Hotel Loyalty Programs: What Does the Future Hold?” session, experts discussed how members receive immediate value from room upgrades, discounts, free WiFi, spa vouchers and complimentary meals. “Our job as loyalty programs is to be the glue that connects the dots,” said Mark Weinstein, global head of loyalty and partnerships, Hilton Worldwide.
At “The Premier Development Cycle” session on mixed-use development, Marty Burger, CEO, Silverstein Properties, Inc., highlighted the upcoming Four Seasons Downtown Manhattan. Scheduled to open June 2016, the $950-million project includes hospitality, retail, residential and parking components. Burger attributed much of the project’s success to the sale of the luxury condominium units.