Industry leaders offer insight at Virtual NYU Conference

By the Hotel Business staff

INTERNATIONAL REPORT—Although the 42nd Annual NYU International Hospitality Industry Investment Conference, hosted by the NYU SPS Jonathan M. Tisch Center of Hospitality, was held virtually this November, it still featured the same insightful takeaways from industry leaders.

Lessons learned from the pandemic

The COVID-19 pandemic is a time like no other, and businesses have had to do things differently than they have ever before because of it, but the experience has taught them a lot.

In myriad ways, leaders learned that so many in the hospitality industry stepped up during the crisis. “When bad things happen, you really get to see who steps up,” said Pat Pacious, president/CEO, Choice Hotels International. “I have looked at the GMs of our hotels and their staffs, who take public transportation to work in the middle of a pandemic, and in many markets, there was social unrest going on, and we made it a point to call out specific people just to say thank you. That’s who’s in the hotel space. That’s who runs our hotels and allows for all the investment returns that this industry generates. It’s the hard-working people that show up every day and have done that through the midst of COVID and done it through the midst of the social unrest that we’ve had.”

He continued, “They’ve done it in the face of guests who need a little help in getting their masks on. That is a tough place to be as a work environment, and it is really something that I think we as an industry are all going to benefit from because those people have been just real heroes in running the hotels and keeping our guests safe and giving them a great guest experience.”

Jim Alderman, CEO, Radisson Hotel Group, Americas, agreed. “I was surprised, given the 20 [cleaning and safety] protocols we put in place, that we had such rapid adoption of them because I was really expecting more pushback because of the cost,” he said. “It’s just that some of the stuff is pretty costly and right now is surely not the time to be adding to the cost of operating a hotel.”

Future of business travel

While all types of travel have been negatively affected by the pandemic, it has been predicted that business travel will continue to fair poorly after the recovery begins.

“I think there will be some marginal change with respect to the total volume of business travel, and I think it’s going to be very purpose-of-visit specific,” said Mark Hoplamazian, president/CEO, Hyatt Hotels Corporation. “I was talking to a banker recently, and he said, ‘The first time that I win a piece of business by getting on a plane to go see a client will be the last time that my competitors don’t,’ and I think that’s absolutely the case now. It’s not to say that every dimension of business travel is going to come back in the same way. I think some training gatherings will change and other forms of internal meetings might change, but there’s a counterbalance to that and it’s really centered around culture and other changes that are underway for a lot of corporations.”

Keith Barr, CEO, InterContinental Hotels Group (IHG), thinks that people still need that connection when working. “I think we’ve gone through this life cycle of we all can work from home and we can all use technology and we never have to travel again, to everyone being tired of saying, ‘You’re on mute’ and ‘Sorry, my internet’s patchy today,’” he said. “I think we’ve come full circle saying we do need to connect. We still have to connect people for creativity, for connection and for culture.”

Hotels are a natural place to go and do that. “Everyone thinks there’s no travel happening, but I was talking to the team the other day and we had a big piece of group booking being booked by one of the major auto manufacturers because they’re building a new plant,” he said. “We had a major production for a U.S. television program buying out one of our hotels for a month. So, you know, people are booking business and traveling. China is a great example of it. The planes are full, the trains are full, and the hotels are coming back because of the movement of people. I’m more confident about the future looking more like 2019 and 2018 than it does 2020 because of the ways that we work and the way that we want to connect.”

Optimism for 2021

While there is no doubt that 2020 will go down as the worst year on record for hospitality, industry CEOs are very optimistic for 2021.

“I will go down right now by saying 2021 will be the highest RevPAR growth year in the history of lodging, following on the greatest decline,” said Chris Nassetta, president/CEO, Hilton. “I think the winter is going to be choppy to stable. I keep telling my team ‘When the tulips come up on the East Coast of America, I think we’re going to be in a very different place. By then, we will be done with the political season, we will have had a lot of progress on vaccines, we will probably have a more comprehensive approach to testing and contact tracing here and, hopefully, coordination will be better around the world. When you get to the spring, I think they’re going to say it’s time to get moving again.”

Arne Sorenson, president/CEO, Marriott International, Inc., agreed. “2021 will be up massively from 2020, and if we’re satisfied in looking at year-over-year comparison, that you just put a period there and say, ‘We’re back,’” he said. “Obviously. I say that a little bit tongue-in-cheek because the growth rates from 2020 will be extraordinary. There will be an increasing sense that COVID-19 is getting behind us from a risk perspective. As that happens, there will be a step up in travel. It will not be instant, but it’ll be pretty darn quick, and what happens after that is we’re going to find out how seriously harmed is the underlying economy, because demand for travel depends on economic strength.”

He continued, “The second thing will be, for our industry, about group probably more than it is about business-transient, but both to some extent will take a little longer to come back. By the time we get to end of 2021, I’m optimistic that a lot of this will be behind us and we’ll be back toward recovery, which feels a little bit more like an economic crisis as opposed to a healthcare crisis.”

David Kong, president/CEO, BWH Hotel Group, said that when he heard that both STR and CBRE had forecast a 45% gain in RevPAR for 2021, he didn’t think it was possible. “The first three months of 2020 was so strong,” he said. “So, in 2021, the first three months probably wouldn’t be very strong. In fact, when you compare that to what we had in 2020, it will be a disaster. We will have to counter the next three months to make up for it. Then, you basically have to count on the remaining six months to be up by 90%. So, initially I was asking myself how that can be possible, but the truth of the matter is that people are becoming more comfortable with this virus. They know there are therapeutics; they know the doctors are beginning to learn how to treat it effectively; and they have 40-some companies globally working on a vaccine. Even though people may not actually take the vaccine, the mere thought of it gives a lot of confidence. So, ultimately, I think it’s doable that the industry can be up by 45% in 2021.”

Beyond the economic recovery, IHG’s Barr was also hopeful that people look back and see that the industry did the right things during the pandemic. “What I hope you’ll see in 2021 is people will look at us collectively—this group and more broadly the industry—that we tried to do the right thing [during the pandemic] and we had a positive impact on our people, on the decisions that governments made, and on this industry, and that we continued to basically advocate for it, too. I think we’re going to be into the recovery in the second half of next year and that we can look back and say that we made a difference, and we made an impact.”

Hoplamazian is also concerned about the how people will recover from the emotional toll the pandemic has had. “A different dimension of rebound and recovery is about the human condition,” he said. “We collectively, I suspect, employ somewhere in excess of 1.5 million people across our brand portfolios. That’s a lot of people and, frankly, 2020 has been an extraordinary assault on people’s emotional and psychological well-being. One of the things that I have been and continue to be very concerned about is the mental well-being for our employees, but also for our guests. I think 2021 will provide a tremendous level of new hope. We’re focused on the future and rebuilding.” HB