It is a curious time for the lodging industry. New competition is entering the market as the sharing economy continues to grow. The upcoming U.S. presidential election has left many hoteliers wondering what the hospitality industry’s relationship with the new president will be like. And while such external threats raise concerns, there are internal questions as well—how can hoteliers best use technology to improve the guest experience? How can hotel companies build new brands to attract key demographics without flooding the supply?
With so much happening all at once, it can be hard to identify which trends are important to zero in on. To kick off day one of 38th annual NYU International Hospitality Industry Investment Conference in New York City, CEOs from four major brands gathered to discuss what megatrends they consider most prominent in the hotel space.
Hilton Worldwide CEO Christopher Nassetta said he fears the industry is myopic in its fixation with the current cycles, when industry leaders should be looking further ahead. “It’s a game of baseball—what inning are we in? Where are we in the cycle?” he said. “But it’s a big world. And if you look at it on average, hotel rooms are significantly underpenetrated in just about every market, particularly the emerging markets, relative to what you’re going to see in population growth and demand as tourist arrivals grow. Forget about the next quarter or two—frankly, I think for the rest of our lives, all things being able are going to be fantastic in terms of what’s going to happen in travel, tourism, and hospitality.”
Piggybacking off the idea of incoming growth in the industry, Arne Sorenson, CEO of Marriott International, said the main positive megatrend he identifies is the millennial push to gain experiences, rather than cars or houses. “That’s a really positive megatrend which we can as an industry harvest and have a lot of fun with,” he said.
But there are two megatrends he also believes hoteliers should keep an eye on, as they could become a potential threat to hospitality and tourism. Sorenson noted the rise of nationalism—the increasing habit of turning inward, strengthening borders, and spreading fear of foreigners—“threatens the ability for people to move freely around the world.”
He also expressed concern over the political discourse surrounding labor. In a tense political climate, the debate over the quality of jobs and quality of life provided by jobs continues to be a hot issue. Sorenson said after the dust settles in this year’s presidential race, hoteliers will need to sit down with the new president to discuss the importance of the jobs hospitality provides. “Our industry has made enormous progress in the last five years. Five years ago, people would disdain the jobs that were being created, and I don’t think that’s the case anymore. This administration values the jobs that we create.”
Richard Solomons, CEO of InterContinental Hotels Group, opted for a less controversial megatrend to highlight: technology. He said the importance of technology comes into play not just with the guest experience or booking process, but is key in revealing how today’s consumer thinks.
“They’re becoming more knowledgeable, more understanding of value—not just price, but value—and are more discerning. I think it comes back to the heart of what we stand for—understanding consumers and creating strong brands that deliver what they need,” Solomons said.
Stephen Joyce, CEO of Choice Hotels, said the industry is in a golden age where not only are young travelers expressing desire to travel, but baby boomers are retiring, freeing up time for the older segment to ramp up travel plans as well. But even with such healthy travel demographics, he suggested hoteliers should observe how sharing services are redefining lodging.
“If you looked five years ago at the people who were willing to accept a non-traditional lodging stay, it was about 6 percent,” Joyce said. “Today it’s 37 percent, headed for 60 percent. Which is one of the reasons we launched Vacation Rentals by Choice. Because they’re looking for different things than we’ve been offering. They’re our customers—why should we let them go someplace else?”