While acknowledging some of the economic headwinds the industry is facing, there is plenty of optimism for the year ahead based primarily on strong travel demand patterns, according to C-level executives at ALIS (Americas Lodging Investment Summit), which kicked off yesterday in Los Angeles, California.
During an interview with LODGING, Anthony Capuano, president/CEO, Marriott International, emphasized the company’s access to real-time consumer spending data from credit card partners as being indicative of a sea change in recent years.
“In a pre-pandemic world, you saw younger generations prioritize spending on travel and experiences over the consumption of hard goods. Post-pandemic it is pretty clear that phenomenon has extended across demographics and feels like it’s sustainable. That’s obviously great news for our business,” he said.
That same sentiment was reinforced during a panel session entitled “Travel & Tourism Outlook” by Geoff Freeman, president/CEO, U.S. Travel Association, who touted the future of tourism.
“From a competitive standpoint, we are in a better position than we’ve even been in. People want to travel. If there was one good thing that happened as a result of COVID it increased the respect that people have for travel. They’re willing to spend more on it than they were years ago. That’s the good part; the demand is there. The challenge is all the obstacles that are getting in the way and the fact that the system wasn’t built for this level of demand. So I think as people in this industry we have to lean in to solve some of these problems for our customers,” he said.
Rosanna Maietta, president/CEO, AHLA, who described herself and attendees as “road warriors” shared a similar outlook.
“It’s never been easier to travel, it’s never been easier to book a hotel room. It is a terrific time to travel and we are going to work hard to make sure it becomes even easier for everyone,” she said.
Jolyon Bulley, CEO, Americas, IHG, meanwhile, told LODGING he was generally bullish as well, based on “strong airline indicators,” among other things.
“Overall, we believe that demand levels have stabilized, growing slightly. That to us is a platform for confidence for owners to have growth in the future as well,” he said.
During a panel entitled “Boardroom Outlook: Roadmap For The Future,” several CEOs weighed in on the transactions market in response to a recent Jones Lang LaSalle report that projects that deal volume could increase as much as 15 to 25 percent this year.
While Geoff Ballotti, president/CEO, Wyndham Hotels & Resorts, acknowledged that “we’re at historic lows right now” in terms of transactions, he believes change is in the offing.
“We’re very optimistic. We’re starting to see the buy-sell come in and transactions will pick up, we believe,” he said.
Chris Nassetta, president & CEO, Hilton, added that “by volume you could see a lot of transactions” by the end of this year.
“In the U.S. we may be surprised by how much private equity scoops up real estate. Almost all of the big [private equity] firms have a lot of capacity to invest,” he said.
Capuano, meanwhile, pointed to the ‘availability of debt for construction’ as a top challenge for the industry as ’25 unfolds.
“There’s plenty of debt available for existing assets, but I think all the big brand companies have hundreds of shovel-ready projects in their pipeline. People often say are they not getting done because of uncertainty about interest rates or uncertainty about the construction cost environment, but they need to secure debt even if it’s a little more expensive than they hoped. That’s a big impediment right now,” said Capuano.
Capuano cited a few other challenges.
“I think there is trepidation about the labor market. One week into [a new administration] there’s a fair amount of discussion about immigration and the like, which could have a meaningful impact on the pool of available labor for service jobs. I think that’s a concern and there’s also some sabre rattling coming out of Washington about travel bans and some other things that don’t bode well for travel and tourism,” he concluded.
