This year’s Americas Lodging Investment Summit (ALIS) had the highest attendance ever, with 3,000-plus attendees descending on the JW Marriott at L.A. Live in Los Angeles last month. Once ALIS 2020 was officially underway, the conference’s theme, which was ‘change,’ became more and more apparent. Jeff Higley, president of BHN Group, which owns the ALIS conference, opened the general session by taking a look at the terms that defined the industry over the past few years, as well as terms that hoteliers believe will define its future. Some of those future words were “consolidation,” “innovation,” “disruption,” and “uncertainty.” “Uncertainty takes the cake,” Higley said, noting it was the word most commonly used to describe the future. “There’s a lot of uncertainty and a lot of change in the industry. But, I think the best words up there are innovation and disruption. Those two define change in a way that nothing else can. They really indicate what we’re on the cusp of as 2020 unfolds.”
Though uncertainty may have been at the top of most attendees’ minds, that didn’t seem to dampen their optimism for how the industry will perform in 2020. According to a pre-conference survey, 58 percent of attendees thought the economy would be flat moving forward, and 32 percent thought it’s going to improve. Furthermore, the majority of attendees thought that RevPAR would either remain flat or slightly increase. “It’s good to see that most people are still very optimistic about what’s going to happen,” Higley said.
Money Matters and Labor Concerns
The data and revenue experts who spoke at ALIS mostly agreed that 2020 will be pretty flat, barring some kind of black swan event.
That said, certain industry factors, such as the cost of labor, are making it difficult for hoteliers to increase profits. Amanda Hite, president of STR, noted that hoteliers will need to focus on growing topline revenue growth this year as a way to increase revenue. “You can’t cost-cut your way to profitability,” she said. “Instead of cost cutting, really pay attention to the labor side, because is that is such a tight market. We can’t really control labor and the wage increases that are happening because we’ve got to hire people for these 800,000 open jobs that we have in the market. So I think everything you can do for the culture and keeping the people that you have engaged is the best time spent in this environment.”
Greg O’Stean, CDO of Aimbridge Hospitality, echoed concerns about labor in a conversation with LODGING, noting that attracting the right employees and keeping them will be key to a property’s ongoing success in 2020 and beyond. “In a rising market, everyone looks like they’re doing great. In a flat market, though, operations have to managed more closely. That includes ensuring that a hotel’s team is supported, which reduces attrition, which is key to keeping costs down.”
Looking at Loyalty
Loyalty was a hot topic at ALIS, with many conversations surrounding how that particular area of the industry has changed and how hospitality companies are working to keep up. Brian Kelly, founder and CEO of The Points Guy, a travel website and blog that helps consumers maximize their loyalty points, said it’s a great time for loyalty in the travel industry. “I think this is the golden age of loyalty because you can earn points in more ways than ever before,” he explained. “Everyone can get a part of it; not just super frequent travelers. I think it’s been democratized in general.”
Kelly added that the partnerships that many loyalty companies are entering into—like how Hilton loyalty members can use their points for Lyft rides—are opening up the loyalty landscape. “I think the most exciting stuff is these partnerships and what they unlock. Credit card companies and travel companies are trying to integrate to every aspect of your life,” he said.
These changes to loyalty are also changing consumer expectations, noted Bridget Blaise-Shamai, VP of customer loyalty and insights for American Airlines, as well as president of the AAdvantage program. However, these changing expectations offer more opportunities for travel companies. “Consumers have greater expectations and tastes and preferences continue to change, and there’s a lot of competition for your attention and your engagement. So that then allows us to look for things that would be easier for [guests] to participate in, and certainly more personalized and relevant. and we have to always ensure that the underlying value, that is the reason that [the guest] joined such a program, remains vibrant and to you as the consumer,” she said.
Two major hotel companies have already launched new brands in 2020. Hilton introduced Tempo, a lifestyle brand, in January. At ALIS, Choice Hotels announced a new midscale extended-stay product, Everhome Suites.
Of course, a now-common industry question came up: How many brands are too many? It seems though, that attendees were not exhausted by the wealth of brands. On the contrary, there was a lot of talk about how catering to niche markets are helping major hotel companies cater to the wide breadth of hotel guests that are currently traveling. Speaking on a development-focused panel, Chip Ohlsson, Wyndham’s CDO, said, “Everyone asks, how many brands are too much? And it’s really consumers [who] dictate that. When brands stop making money, then that’s when they die from over-extension.”
Ohlsson added that the challenge is ensuring that the industry’s concerns don’t become a self-fulfilling prophecy. “Every conference I’ve been to for the past four years, we say, ‘This is it.’ But, the fundamentals are still there. We see a little flattening happening, but we’re going to talk ourselves into a recession.”
Ohlsson also noted that some course correction might not be a bad thing, as construction and labor costs are swiftly rising, but hoteliers should take care not to talk themselves out of development opportunities.
While the overall mood was optimistic, the conference also allowed industry leaders to turn a spotlight on the challenges facing hoteliers in 2020. One of the top concerns facing the industry is human trafficking. AHLA president and CEO Chip Rogers, spoke emphatically about the industry’s responsibility to stop this heinous crime. “We are a unique position as an industry to help eliminate a crime that should never exist in America in the 21st Century; a crime that impacts 40 million people a year. Because human trafficking oftentimes takes place in a hotel, we have an obligation to shine a bright light on this particular crime and to help stop it.”