Optimistic outlook from hotel execs at NYU conference

NEW YORK — Based on sentiments shared at this year’s NYU International Hospitality Industry Investment Conference, held here in early June, impact from high inflation and recession fears appears to have done little to dampen the hotel sector’s momentum.

“For us to forecast growth when we’re expecting a declining economy is unheard of,” Amanda Hite, president of STR, said at the conference. “We’ve never seen two consecutive quarters of GDP decline and not seen any hotel demand decline. It’s very much uncharted territory.”

During the conference, STR and its forecasting partner, Tourism Economics, released a slightly upgraded U.S. hotel forecast for the year, increasing their projections for ADR and RevPAR by 0.5% and 0.3%, respectively. At the same time, however, STR downgraded its occupancy expectations by 0.1%.

The current 2023 forecast now predicts growth of ADR by 2.1%, RevPAR by 3.7% and an occupancy level of 63.6%.

Hite warned of potentially “choppy waters ahead,” however, as growth starts to taper and inflation continues to rise at a faster rate than ADR.

“The bulk of our growth came in the first quarter, and in the second half of the year we will still have growth, but it will be very little by the fourth quarter,” said Hite. “And inflation is running at 6%; if we only grow rates at 3.7%, we’re not keeping up.”

According to Aran Ryan, Tourism Economics’ director of industry studies, the group’s parent organization, Oxford Economics, is still predicting that the U.S. economy will experience a “mild recession” this year, characterized by a 1% decline in GDP and a one-percentage-point increase in the unemployment rate. 

Despite repeated warnings of an impending recession, however, many of the industry’s top executives remained bullish in their outlook.

“This has been ‘the rolling recession,'” IHG Hotels & Resorts CEO Keith Barr said during an executive panel. “We’ve been talking about this recession for [a long time now] — it’s next quarter, then next quarter. If you look at where unemployment is in this country right now, the strength of consumer spending and the health of businesses’ balance sheets … we’ve got so many different things that are tail winds.”

Anthony Capuano, CEO of Marriott International, also said the company has yet to see any early signs of a slowdown, “even in the face of some pretty troubling economic head winds.”

“Forward bookings are pretty compelling,” he added.

According to multiple chief executives, bookings in both the U.S. and Europe remain strong, with Hyatt Hotels Corp. CEO Mark Hoplamazian describing demand within Europe as “on fire.”

“Business travel in Europe is practically at 2019 levels,” Hoplamazian said. “It’s the only region or subregion that we have that is actually attracting business-transient travel.”

Hilton CEO Chris Nassetta, meanwhile, acknowledged the continued lag in outbound travel from China, but he remained confident about a meaningful recovery on that front in the near-term.

“Outbound China, which is a huge benefit, that’s coming in the second half of the year,” Nassetta predicted. “I have every confidence that it will be the largest outbound market again.”

Leslie Hale, CEO of RLJ Lodging Trust, was similarly upbeat but tempered her optimism with some concern. 

“If I look at the fundamentals today, they remain healthy,” Hale said. “But as I look at the economic backdrop, the Fed is determined to damper inflation. And so that is going to have an impact on the economy. The million-dollar question is when and to what degree?” 

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