NEW YORK — Exceptionally high hotel rates as well as continued strong demand are the talk of the town — at least, the talk of the NYU International Hospitality Industry Investment Conference.
Setbacks like labor shortages, inflation and the looming threat of a potential recession haven’t stalled the hotel industry’s Covid-era momentum.
During a June 6 panel, Accor CEO Sebastien Bazin described 2022 thus far as “a very interesting time.”
“We’ve never seen so much demand and never seen better pricing,” said Bazin. “We have pricing above pre-pandemic” levels.
The robust data trends have led to an improved forecast. STR and Tourism Economics last week projected that the U.S. hotel sector will achieve full recovery of revenue per available room (RevPAR) in 2022.
In fact, STR and Tourism Economics now predict that the U.S. market’s average daily rate (ADR) and RevPAR will come in $14 and $6 higher than 2019, respectively.
“Pricing continues to exceed expectations due to the influence of inflation as well as the economic fundamentals supporting increased guest spending,” STR president Amanda Hite said.
She added that the data firm’s forecast “acknowledges the risk of a light recession.”
During a panel discussion at the conference, Marriott International CEO Tony Capuano said that the hospitality industry was currently experiencing “extraordinary” demand volume.
“All of us have seen over the last number of quarters the resiliency of travel, and the resilience of our business model just gets borne out every day in the data,” he said.
“And even in the face of the confluence of challenges out there, between Ukraine, the interest rate environment, etc., most of us are not seeing [those challenges] in our numbers.”
Hyatt Hotels Corp. CEO Mark Hoplamazian separately expressed confidence around U.S. consumers’ ability to spend on travel, even as prices for food, gas and other goods rise.
“Yes, there may be some impact on the edges of demand. But at least for Hyatt, the category of traveler making a trade-off between the pump and necessities at home and taking a trip, I don’t think that’s our core base of customers,” Hoplamazian said.
Who’s fueling demand?
Hilton CEO Chris Nassetta credited both leisure travel, which he characterized as “off the charts,” as well as a more recent comeback in business travel as companies play catch-up on missed opportunities for meetings and events.
Capuano said that business travel demand has been “steadily” climbing in recent months. Business travel was down 10% to 15% in Q1, he said, compared with a 30% decline in Q4 2021.
“It’s slow and steady, but as you see more return to the office, even if it’s on a hybrid basis, that’s acting as a real catalyst,” he said.
The inbound market was also being impacted by the U.S.’s predeparture Covid testing policy, which the Biden administration finally lifted. Several executives took issue with the policy onstage, with IHG Hotels & Resorts CEO Keith Barr calling the practice “absurd.”
Nassetta was similarly critical of the testing requirement, describing international travel as “being put on the backburner” due to Covid.
“But it’s one of the best exports America has,” said Nassetta. “It’s a huge component of economic growth and jobs growth. And having both legislation and policy that really addresses it is critically important.”
Mitigating staffing shortages
Although labor continues to be in short supply in markets across the globe, Nassetta said that the staffing situation is “improving” and is likely to normalize over the next few years.
Geoff Ballotti, CEO of Wyndham Hotels & Resorts, pointed to several solutions the industry has adopted in order to better attract and retain staff, including more flexible scheduling policies designed to be more accommodating for workers with childcare or elderly care responsibilities.
“So many of the practices at the hotel level in our industry are very antiquated,” said Ballotti. “We’ve been stuck in this Old World thought about how you schedule people to work, and every one of us is working on a more dynamic way of helping people to self-schedule.”