The second day of the NYU Hospitality Investment Conference was brimming with insight and advice from everyone—CEOs to financial advisors to development experts. In the morning’s opening session—The Leaders Forum, which was moderated by Scott Berman, principal and industry leader, Hospitality and Leisure, PwC—execs from top brands dished on some of the top trends in the industry, including the value of brands, the significance of loyalty programs, vying for travelers’ time, as well as money, and increased industry consolidation.
David Kong, president and CEO of Best Western Hotels & Resorts, discussed how there is a value in brand names that allows hoteliers to charge more for a product based on the pedigree of the name alone, like with Coca Cola. He also added that brand value means something different for hoteliers than it does for travelers. “In [owners’] case, the value of a brand is, how can we enable [them] to make even more money? Success is going to be measured by how we’re helping [them] drive superior revenue. Are we helping [them] get [their] proportion of market share? Are we helping [them] enhance [their] value?”
Geoff Ballotti, president and CEO of the Wyndham Hotel Group, added, “Brands have never mattered more. But what are our brands contributing from a shared occupancy standpoint? Is our share of occupancy contributed to our owners continuing to rise and continuing to go in the direction we want it to go? That’s more than anything what we’re providing [with our brands]. Growing market share and helping our owners grow margins.”
When it came to loyalty programs, J. Allen Smith, president and CEO of Four Seasons Hotels and Resorts, had a different perspective than the other panelists, due to his company’s single brand. “What our guests are looking for more than anything is recognition and highly personalized service. So they want everything the way they want it, and they expect us to know what those things are.”
Smith also talked about the launch of Four Season’s new branded jet, which led him to realize that hotels are able to capitalize on guests’ time more now than ever before. “What’s been interesting to me about [the jet] is less about the jet experience itself, but what it tells us about what our best customers want from us. And that is that they want more of this end-to-end experience, where we’re playing a bigger role in their overall travel,” he said.
In terms of merger and acquisition (M&A) activity, all of the CEOs thought that the industry would continue to consolidate in the years to come. Kevin Jacobs, EVP and chief financial officer of Hilton Worldwide, commented, “There’s bound to be more consolidation in our industry because scale does matter and the Network Effect does matter. There’s a recognition, I think among companies and in board rooms that this Network Effect may be a thing, and if it is a thing, how do you pursue and how do you solve for that? And we think about M&A opportunistically.”
Overall, the executives had a positive outlook for the future of the lodging industry in the long term. “The fundamentals of industry are still in tact: A rising middle class and prosperity around the world, which leads to rising desire and wish for travel. And until they figure out something else, when people travel they need to sleep and have restaurant and bar experiences. As long as we do it well, we have a business to be in,” said Elie Maalouf, CEO of the Americas, at IHG. “I will say that a bit of healthy skepticism is not bad, to make sure we are focusing on the right projects on the right ideas on the right brands on the right locations on the right deals. Irrational exuberance is not necessarily healthy, but I think we’re optimistic and we don’t dislike a bit of healthy skepticism.”
