The Language of Optimism
At the 32nd annual New York University Hospitality Industry Investment Conference, which drew close to 1,000 attendees at New York City's Marriott Marquis last week, hotel executives across the board were positively brimming with optimism.
At the opening general session, the CEOs of several major international chains (Best Western International, Hyatt Hotels Corp., InterContinental Hotels Group and Marriott International) were unanimous about first-quarter numbers for the year: They had exceeded all expectations. Not only are business travelers hitting the road again, corporate group bookings are beginning to return, and room rates finally are inching up. Arne Sorenson, president and CEO of Marriott International, went so far as to say he was "wildly optimistic, because we've already had a few months of some pretty stunning numbers and powerful demand."
Cut to the next session, an industry update from Mark Lomanno, president of Smith Travel Research. Not only are U.S. hotels continuing to lose five million group nights a month, the U.S. is the only market that has not seen a rise in the average daily rate. What's more, it could take five to eight years before the industry sees any real rate recovery. Confused? So were many in the audience, including one bewildered attendee who asked aloud, "Is it me, or are we in a parallel universe?"
Of course, hoteliers can be forgiven for their enthusiasm. Compared to last year's cliff dive, any positive trend in numbers looks good. As David Wyss, chief economist for Standard & Poor's, pointed out in his presentation, even the low point could be viewed as hopeful. "A bottom is defined by things not getting worse," he said. "That's the point of a bottom." Some markets are definitely experiencing increased demand, mostly driven by transient business travel, and room rates have stabilized. But it's group business, everyone agrees, that will drive any real industry recovery. "Any piece of corporate group business that has a pulse, we are chasing down," said one hotelier. "That's where the real power pricing is."