NEW YORK CITY — Secular trends and technological advancements will drive hospitality success in the years to come, according to a panel of industry CEOs speaking at the International Hospitality Industry Investment Conference in New York on Tuesday.
“People are traveling more and more," MCR Chairman and CEO Tyler Morse said. "The rates of travel per capita, per nights on the road, continue to grow. If you compare the population of the US today to 100 years ago, it has grown by 3.5 times, and all of those people are traveling more.”
“The experience economy continues to expand, luxury is booming, and business travel is back as people get out on the road to see their customers.”
Aimbridge Hospitality CEO Craig Smith added: “The trend I am excited about is the growth of third-party management. You see a lot more franchising overall, and there are still a lot of folks that want to self-manage hotels, plus lots of traditional companies that want to run their own brands. There’s a huge group of operators that want to slot themselves in the space and that is creating a massive opportunity.”
Looking at global patterns, he added that this trend was already prevalent in the U.S. and suggested that “Asia Pacific will grow more towards a franchise model”.
Growth Decelerating
Joseph Bojanowski, president, PM Hotel Group, warned that while the outlook was fairly robust, growth was “decelerating in places and bookings are likely to be down 3 percent next year.” He added: “All that aligns around continued pressure on hotels and growth margins and calls for a deeper collaboration than ever between owners, brands and managers.”
Noted Greg Friedman, managing principal & CEO, Peachtree Group: “Interest rates have been pretty impactful to the transaction markets. All of commercial real estate has been impacted and we are still feeling the pain of those higher rates, putting pressure on groups that have loans maturing.”
Countered Morse: “That creates opportunities though. Interest rates are not going down – they are going to stay at 5 percent. Capital has a cost. If you go back 500 years to the time of the Medicis, that was always the case.”
Added Warren Fields, president and CEO, Pyramid Hotel Group: “We as an organization are very bullish on growth, and bullish on development. If demand is growing at 2 percent, supply is half that.
“When I got out of college, interest rates were 12 percent. Today they are 7 percent. In my world, when you see assets that are cash flowing and you can see opportunities from a management perspective, you should buy them. Whether or not the interest rates are 3, 5, or 7 percent on a long-term basis - you should be able to win. There are always headwinds in every cycle; the ones that can figure out how to move the headwinds out of the way can win.”
Technology Potential
Speaking on technology, Bojanowski said that artificial intelligence could help the business move forward in places. “Our industry has historically been far behind the curve. But in areas like revenue management it can take structured data and combine it with unstructured data to understand where your pricing power is.”
Said Fields: “AI will never take over our business – it can’t. But tech can make you more efficient for some accounting processes. Even if we adopt more tech, the guest-facing part of our business will never go away.”