Prior to the opening of the 44th annual NYU International Hospitality Industry Investment Conference at the New York Marriott Marquis, hospitality revenue management software and services provider IDeaS, a SAS company, held a Thought Leadership Roundtable that brought together a varied group from around the hospitality industry.
The roundtable, moderated by Michael Frenkel, president, Travel Conversations LLC, included Lisa Checchio, chief marketing officer, Wyndham; Isaac Collazo, VP, STR; Tom Corcoran, founder, TCOR Hotel Partners; Klaus Kohlmayr, chief evangelist/business development officer, IDeaS; George Limbert, president/CEO, Red Roof; Robert McDowell, chief marketing officer, Choice Hotels; Ravi Mehrotra, president, IDeaS; and Keith Pierce, EVP/president, franchise & development, Sonesta.
After a presentation from STR’s Collazo on the current statistical state of the industry and noting that some areas have already surpassed 2019 numbers while others are still struggling, the panel discussed why this is.
“I think it is everybody except those located in the major cities that rely on groups,” said Corcoran. “Look at the STR reports on the top 25 cities. You still have Washington, DC and San Francisco extremely negative to where they were in 2019. You’ve got your big cities, all the big group houses, really suffering, whereas Vegas looks like it has come back. It is another anomaly that groups are coming back to Vegas…It is a world of haves and have-nots.”
Mehrotra said that while group and business travel have slowed, “I don’t believe for a moment that business can try to survive without face-to-face meetings. Sooner or later, that will start to happen.”
When it comes to leisure, Mehrotra said that people are now traveling shorter distances for their vacations, while Limbert said that some are taking shorter-length trips. “We call them ‘shrink-ations’—shorter travel. You are still going to pay the rate, but you are just going to stay fewer days,” he said.
When asked by Frenkel what could be a threat to the hospitality recovery, Pierce said it could be employers changing their policies on the hybrid workplace. “[The hybrid workplace] is a really good thing for us as hospitality owners and operators on a whole host of levels,” he said. “But if you force people to go back into the office, then you are going to burn through their cash in commuting, they are going to save their vacation and then going to do those one or two big ones versus doing 10 five-dayers.”
Inflation is also a factor that will affect the industry. Corcoran said that while it has been good for the hotel business because of the ability to raise rates, the increased cost of goods is a problem. “I don’t know how the brands are going to dictate franchisees do everything that they should be doing because I don’t know if they can get it No. 1, and whatever prices they can get are up 30-50%.”
He said that hotels have deferred maintenance for the last three years, adding, “If they started today, they couldn’t get [the materials] until 2023. The question is what’s the availability and the cost. I see that as the biggest threat. How are we going to keep the customers happy with [unrenovated properties].”
The shortage of labor remains a concern and will continue. “We as an industry [have] been holding our breath on the labor shortage because we think [workers] are going to come back,” said Limbert. “We think there is going to be some magical solution. Stop holding your breath because this isn’t going away.”
He believes that technology is the way to deal with the issue. “You’ve got to solve the customer service, you’ve got to solve the quality issue,” he said. “…Not with the people and a smile like we have always done in the history of hotels, but with enhanced technology.
Pierce pointed out that the challenge is that the majority of a hotel’s employees are housekeepers, adding, “A robot can’t tuck in the sheets.”
Checchio said that franchisees are looking to the brands to help them. “Our franchisees have an expectation that we’re going to help them to control costs,” she said. “If you look at a P&L from 10 years ago and now, the most expensive thing is labor. Who knows if it will be robots, but it will be something.”
McDowell said it is up to brands to help owners and operators cut costs. “What can we take off our franchisees’ plate to help them run their hotels better?” he said. “…We’re trying to look at how we actually decrease the cost of ownership for our franchisees, but also make the travel for guests more frictionless to the point of they want to stay with that brand.”
Even while wages are up at hotels, they are lagging behind what other industries pay. “On a percentage basis, the rates we are paying for housekeepers and front desk (staff) have gone up compared to some other industries, but on an absolute dollar amount in terms of rate per hour, we are still below every other industry that we are competing against—transportation, logistics, utilities,” said Checchio. “But, our hoteliers are really feeling that they are paying that much, but from a competitive perspective, they can’t get employees.”