A labor shortage, recession and Covid are obstacles the hospitality industry must overcome. But the mood at NYU’s 44th Annual Hospitality Investment Conference remained upbeat.
The mood at NYU’s 44th Annual Hospitality Industry Investment Conference was upbeat on Monday, even as the industry faces some challenges.
Among the positive news was the prediction that revenue per available room, called RevPAR, will surpass 2019 figures before the end of the year, according to data firm STR and Tourism Economics, a global tracking firm.
During a morning that kicked off the conference, “The CEOs Check In: A View From the Top,” panelists – Keith Barr, CEO of IHG Hotels & Resorts, Sébastien M. Bazin, Chief Executive Officer of Accor, Anthony Capuano, CEO of Marriott International, Mark S. Hoplamazian, Chairman and CEO of Hyatt Hotels Corporation, and Christopher Nassetta, Chairman and CEO of Hilton, all said they had never seen demand as they see it now.
“There is a human need to come together, to reconnect, to reunite, whether for professional or personal reasons. There’s just this incredible human and emotional quotient. And that’s what drives these numbers. It’s not just pleasure travel. Companies are desperate to bring their employees together,” Hoplamazian said.
The speed at which the industry has recovered is rapid. “After (9/11) and the Great Recession, it took four to five years to recover, but not now,” Capuano said. “Service delivery is the biggest challenge.”
Labor shortages continue to be an obstacle, according to CEOs. “I have never seen so much demand and such prices, but many of our hotels cannot accept full occupancy,” Bazin said. “We don’t have the staff. We don’t have the manpower. We have to leave two floors empty because we cannot serve our people. It is a tragedy to which all five of us must react very quickly and together.
IHG Hotels & Resorts lost 20-25% of staff, according to Barr. That number is 10% at Accor, Bazin said.
Nassetta thinks those numbers will correct themselves and staffing should be less of a problem by October. One way to kick-start the correction is to make shifts more flexible. CEOs discussed the appeal of a bus stop schedule where a workday begins when kids are dropped off at the school bus stop and ends when they get home from school.
It seemed fitting that the US Department of Commerce unveiled its new strategy to boost international tourism on the day of the conference. US Secretary of Commerce Gina Raimondo has announced a goal of attracting 90 million international visitors by 2027, who will spend around $279 billion a year, a figure higher than before the pandemic.
Panelists commented that this would be accomplished if pre-departure Covid testing was eliminated. “It’s the most absurd thing,” Barr said. “We need to take the friction out of travel and this testing is high on the list.”
Nassetta said he was working with Secretary Raimondo to get the tests canceled, but the latest Covid surge is making that difficult.
Another focus of the session was diversity — ironically, next to moderator Sara Eisen, anchor of CNBC’s “Closing Bell,” there was absolutely no diversity on the panel.
Marriott held a press conference earlier today to launch “Marriott’s Bridging the Gap,” a $50 million development program focused on removing barriers to entry that historically underrepresented groups face in owning and developing hotels in the United States and Canada.
“Underrepresented categories include black ownership, Latin ownership, female ownership, and Native American ownership. They are terribly late. So we launched a platform. And I guess my colleagues here will do something similar,” Capuano said.
IHG’s Barr shared that the company’s new president is a woman – Deanna Oppenheimer. When searching to fill this role, the requirement for previous experience as president had to be eliminated.
Covid lockdowns in China also add uncertainty to a full recovery. “The elephant in the room is Greater China,” Barr said. There was a sense of optimism, however, as earlier today Beijing announced it would ease some of its Covid restrictions.
Another issue to deal with is what Nassetta calls the “r-word” – recession.
“We all need to make sure we’re prepared as the Federal Reserve here in the United States, and many places around the world need to get inflation under control, and the way they do that is to slow down economies,” said- he declared. “But in the face of potentially reduced economic growth, there is still massive demand, particularly for business, meetings and events.”
Hotels today should be more than a place for a head in a bed. “It’s much broader than selling overnight stays,” Bazin said. “It’s more and more a concierge service. We want our customers to come back richer in terms of experience, to help them discover something they can’t discover on their own.