HB on the Scene: Economists offer thoughts on recovery

ATLANTA—The 33rd annual Hunter Hotel Investment Conference, held here at the Atlanta Marriott Marquis, marked one year since the industry started meeting again after the world was shut down by the pandemic.

There was an air of cautious optimism among the attendees and presenters about the continuing return of travel and what the future holds.

During the “Statistically Speaking — A 360-Degree View,” moderated by Mark Woodworth, principal, R.M. Woodworth & Associates, industry prognosticators—Rachael Rothman, head of hotels research and data analytics, CBRE Hotels Research; Vail Ross, SVP, sales and marketing, STR; and Cindy Estis Green, CEO/cofounder, Kalibri Labs, offered their predictions for the recovery and thoughts on issues the industry will face during the recovery.

Woodworth said some of those who left the industry may be returning soon. “Most of the people that have left the labor force—and this is really the senior and prime-age worker category—they do not have college degrees,” he said. “Their status today may reflect the perception that they think their job prospects are poor. So, they’re really not out there looking for what opportunities might be there. Importantly, this particular cohort typically has significantly less of a volume of savings, so they don’t have the economic cushion to carry them through, which would then suggest we’ll see some returning to the labor forces as that continues.”

When asked by Woodworth what concerns her the most, Ross felt that it was labor. “It is not only people not coming back, but our industry was not one that was selected prior to the pandemic, and what are we doing to tell that story to make sure that they do understand that this is a career path, not only for our hotels, but for our destination organizations, and that if you are interested in economic development and those driving forces, this is an industry for you,” she said. “Making sure that getting people back to work or even selecting our industry is a concern.”

On a positive note, she said that the continued strength of revenue management skills as an industry, “not only the humans, but the tools, is definitely the silver lining of what we are seeing coming out of this downturn,” she said. “We would suspect that it is going to continue.”

A concern for Estis Green is the fact that the economics for hotels may be altered. “It is for a few reasons—cost of labor is going up; inflation, this may be more transient, but it is seeming like it is more persistent; increasing costs; [and] costs of acquisition of customers,” she said. “We have big tech titans of the industry, we’ve got Google and Airbnb and everybody is going after corporate business and trying to aggregate it. Those costs are going to keep coming back to the owners and the operators and the brands as just a more costly way to operate.”

She added that the move toward hybrid work will be a positive for the industry. “People are going to be happy to stay in different places and be able to work on Friday and Monday from different locations,” she said. “The remote work also means that the teams are going to have to come together more often. There are going to be new versions of groups that we have never had before.”

CBRE’s Rothman said that, given the war in Ukraine, she is very bullish on drive-to and resort destinations in the U.S. “I think customers that might have considered going to Europe in the summer of 2022 as we have eased our restrictions are likely to stay closer to home,” she said. “That will spill over into sun and sand destinations in the Caribbean and Mexico. I am also very bullish on small select-service hotels in oil and gas industry markets within the U.S. because getting to oil and gas reserves here is becoming more economical as we have seen the price skyrocket.”

She said that, as a consumer, she is “not all that optimistic” about guest satisfaction beyond luxury resorts, where they truly can price and employ to keep staffing levels high, adding, “I think we will continue to see this ‘do more with less’ [mindset]…and guest satisfaction will suffer. I am also cautious on margin. I don’t think that we will be able to price to maintain margins. That doesn’t mean that cashflows won’t improve, it just means that as topline improves, we could see margin degradation.”

(Shown above left to right: Rachael Rothman, Cindy Estis Green and Vail Ross)