New York – It’s shaping up to be a good four- to five-year stretch for the hotel industry. That’s if you believe a slew of hotel executives, who spoke on the matter at June’s New York University International Hospitality Industry Investment Conference at the Marriott Marquis.
The annual conference is an early-summer barometer of which way the wind is blowing in the hospitality industry. In this case, it’s a tailwind, said Thomas Baltimore, CEO of RLJ Lodging Trust, during the “REIT Beat” panel. “I think we are in the fifth inning,” he said. “I see another four to five years in the cycle.”
Jay Shah, CEO of Hersha Hospitality, was as hopeful and positive. “Unemployment continues to improve and that helps the economy,” he said. “We are in an era of urbanization, globalization and digitization. It drives travel.”
Added Monty Bennett, chairman and CEO of Ashford Hospitality Trust, “We have many years to run. The Fed is very accommodative. Rates need to move up to slow it. I don’t see recession any time soon.”
CEOS CHECK IN The cheerful news from the REITs was echoed by many of the hotel company CEOs, participating in the “The CEOs Check In” panel. Richard Solomons, CEO of InterContinental Hotels Group, may have said it best and with brevity: “We’ve had 37 months of record demand.”
Other hotel operators were of similar accord. “There is rising wealth, greater demand and a big influence in technology,” said Frits van Paasschen, CEO of Starwood Hotels & Resorts Worldwide.
And it’s happening at all levels and segments. “The high end and low end are both doing positively,” said J. Allen Smith, president and CEO of Four Seasons Hotels & Resorts. “With exception of locations of political strife, there are remarkable RevPAR gains from around the world.”
Understanding guests, personalization and emerging markets were other topics of significance.
Arne Sorenson, CEO of Marriott International, said Marriott Rewards, Marriott’s loyalty program, will hit 50 million members this year.
“They all like being engaged. The focus now is on capturing folks we don’t have. Let’s find SPG members, bring them in and see what they are all about,” he said, eliciting a grin from Starwood’s van Paasschen.
THE VIEW FROM BLACKSTONE One of the better-attended sessions featured Jonathan Gray, global head of real estate for Blackstone Group. One, because Blackstone tends to be quiet about their business, and, two, because it’s one of the largest players in the hotel industry: it successfully took Hilton Worldwide public last year after acquiring it for some $26 billion in 2007 and, more recently, bought The Cosmopolitan in Las Vegas for $1.73 billion in May.
Occupancy and other indicators in 2014 and 2015 are expected to show robust performance, according to new projections from PwC and STR. An updated lodging forecast released by PwC US anticipates stronger occupancy gains in 2014, setting the stage for 2015, during which PwC US anticipates the highest occupancy levels in 20 years. As the economy rebounded from a weather-related slowdown in the first quarter of 2014, travel activity picked up significantly in the second quarter, resulting in better than expected occupancy performance, and average daily rate results that were only slightly less than anticipated. While transient travel – both commercial and leisure – continues to show steady gains, hoteliers are reporting strong trends in the group segment, which still has room to recover to peak levels.
This increased momentum of demand growth in the second quarter and a robust summer travel season also resulted in public lodging companies increasing their guidance on revenue per available room growth for the year, according to PwC. This, coupled with continued growth in group demand and steady above-trend economic momentum, supports PwC's expectation of a
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