NEW YORK – Concerns about high inflation and a possible recession did little to dampen sentiment at this year’s NYU International Hospitality Industry Investment Conference. For the remainder of 2023, industry top executives remained optimistic.
“We’re not seeing any real slowdown, even in the face of some pretty worrying economic headwinds,” Marriott International CEO Anthony Capuano said during a panel discussion at the June 5 conference. “Forward bookings are pretty convincing.”
Keith Barr, CEO of IHG Hotels & Resorts, was similarly positive, claiming that the hospitality sector “probably has more tailwind now than any other industry.”
Barr cited the continuation of an “incredibly resilient” recovery in markets like the US and Europe, as well as encouraging consumer trends.
“From a consumer goods perspective, travel is one of the last things they don’t want to spend on,” Barr said, adding that factors such as low unemployment and the industry’s “healthy balance sheets” are helping to ward off the threat of a protect against economic slowdown.
Accor CEO Sébastien Bazin confirmed that consumers seem more willing than ever to pay the highest price for travel, citing the exponential growth of the industry.
“Prices are going up and staying there, which comes as a bit of a surprise to us,” Bazin said.
RLJ Lodging Trust CEO Leslie D. Hale told the audience that hospitality fundamentals “stay healthy,” while Hilton CEO Chris Nassetta drew attention to a comeback in the corporate travel space, though he acknowledged that small and medium-sized businesses are making the move They account for an outsized share (85% to 90%) of the company’s total business travel volume.
Some of this bullish sentiment was echoed by data from STR and its forecasting partner Tourism Economics, with STR releasing a slightly upgraded 2023 US hotel forecast during a conference presentation.
The hotel industry is in uncharted territory
STR revised its forecasts to include a 0.5% and 0.3% increase in Average Daily Rate (ADR) and Revenue Per Available Room (RevPAR) respectively, partly due to stronger than expected GDP performance. However, occupancy saw a slight decline, with growth for the year expected to be lower than forecast (0.1%).
Despite continued rate hikes, STR President Amanda Hite warned of “troubled waters”, citing slowing growth and the fact that inflation is outpacing ADR.
“Most of our growth came in the first quarter, and we’ll still have growth in the second half of the year, but there will be very little going into the fourth quarter,” Hite said.
Nevertheless, Hite emphasized the continued resilience of the hotel industry.
“For us to forecast growth when we expect the economy to slow is unheard of,” Hite said. “We’ve never seen two consecutive quarters of GDP decline and no decline in hotel demand. This is completely new territory.”
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