NEW YORK CITY—Against a backdrop of relentless optimism, major hotel company CEOs and executives expressed some surprising views on industry issues and trends during the 37th annual NYU International Hospitality Industry Investment Conference, held in Midtown earlier this week.
“The next few years are going to be exceptionally good years, among the best we've seen,” asserted Christopher Nassetta, president and CEO, Hilton Worldwide. “While supply is inching up still at historically low levels. Demand, while not raging, is growing at a steady pace. The US economy—most people would say—is stable, with moderate growth and the ability to pick up. That against modest supply additions will be good for our business.”
After several comments on the return of group business, Hyatt Hotels Corp.president and CEO Mark Hoplamazian noted, “Group bookings for the quarter/in the quarter were up 15% in Q1. Corporate profitability is growing faster than GDP growth so we expect a durable strength in business over the next few years.”
So where do industry principals have their sights set? They're focused on interest rates, new competitors like Airbnb, consolidation and more, but some of their ideas are rather unconventional.
“With so much savings in the world, I think interest rates could go negative in a meaningful way,” declared Monty Bennett, founder, chairman and CEO, Ashford Group of Cos. “Quantitative easing is just about out of gas and there's not much else the Fed can do. Making rates negative is an elegant solution to the problem of too much debt in relation to GDP; we're already seeing it on other countries. If rates go negative, it pays borrowers and reduces the debt burden over time.”
Of the popular home sharing system Airbnb—which has become a giant thorn in the side of the traditional hotel industry—Nassetta says it's not necessarily a bad thing.
“I think there's an opportunity with Airbnb, HomeAway and these platforms to be additive if everyone's operating by the same rules. Travel and tourism is one of the fastest growing industries in the world, the pie is growing bigger and these organizations are allowing that by democratizing the industry and ancillary spend—that's good! But what's important is that you don't have businesses being created that are skirting the rules.”
“Airbnb is being disruptive when guests are not paying occupancy tax, there's no fire and life safety information provided and more,” says Geoff Ballotti, president and CEO, Wyndham Hotel Group.
Adds Katherine Lugar, president & CEO, American Hotel & Lodging Association, “The issue is much bigger than hotels, it's about consumer safety, creating jobs and more things that the industry provides that [Airbnb does not]. Our focus isn't on individuals renting a room but on commercial enterprises.”
Stay tuned for discussions on industry consolidation, financing and more in part two of this GlobeSt.com series.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
