CONFERENCE REWIND
SUCCESSION OF FAVORABLE CIRCUMSTANCES just the confluence the hotel industry needed
THE HOTEL INDUSTRY WAS BATTERED BY COVID , BUT THE AFTERMATH HAS BEEN A VIGOROUS SNAPBACK .
By DAVID EISEN
NEW YORK — Keith Barr , the outgoing CEO of InterContinental Hotels Group , offered one more astute observation before exiting the stage . “ We had the most headwinds in COVID , but now have the most tailwinds ,” he told the audience , here at the NYU International Hospitality Industry Investment Conference at the Marriott Marquis .
Barr might be checking out of the chief role at IHG , but he still has the pulse on what is driving the hotel industry , one that was shared by fellow hotel CEOs speaking on a morning panel . “ Travel has come roaring back ,” said Tony Capuano , CEO of Marriott International . “ We don ’ t see a slow down .”
The hotel industry was battered by COVID , but the aftermath has been a vigorous snapback , bolstered by a supply and demand mix that has resulted in strong hotel performance . On the demand side , travelers , especially leisure travelers , have flocked to hotels in what Barr said was no longer discretionary spend , but “ the last thing consumers want to give up .” At the same time , new supply growth is at an all-time low due , in part , to the lull in construction during COVID and after with the exorbitant cost to finance .
Supply growth historically grows around 2 % annually . It ’ s around 0.4 % now , said Hilton CEO Chris Nassetta . “ We have no capacity issues ,” he said , and when you layer in financing for new construction and the lengthening of the construction cycle , “ supply doesn ’ t change overnight ,” Capuano added .
Low supply growth , which Leslie Hale , CEO of RLJ Lodging Trust , called “ music to my ears as an owner ,” mixed with high demand has given hoteliers the cover needed to push average daily rates to new highs . “ Rates are through the roof and staying there ,” said Sébastien Bazin , CEO of Accor . “ The future never has been as strong — stronger than pre-pandemic , even .”
Consider Paris prices . Bazin said hotels there are up 50 % over 2019 . He added that in the ultra-luxury space , price is no obstacle for customers . The problem is “ we don ’ t have enough suites ” Bazin said .
Added Barr , “ We haven ’ t reached a rate ceiling yet . In fact , he said , pricing is where it should be . “ We have now caught up .” A similar sentiment was shared by
Mark Hoplamazian , CEO of Hyatt Hotels
8 hotelsmag . com Jul / Aug 2023