New York - Corporate
travel buyers should brace for another round of tough negotiations and rate
increases in the upcoming request-for-proposals season, with hotels in an even
stronger position than they were this time last year, several hotel executives
said Tuesday at the New York University International Hospitality Industry
Investment Conference.
Marriott International president and CEO Arne Sorenson was
unequivocal about the company's intent to increase negotiated corporate rates
when talks begin later this year. "We have another year where occupancy is
growing from already record levels," he said. "We have many months
ahead of us, and you can't take anything for granted, but I suspect most people
will go into those negotiations knowing that rates are going up."
Four Seasons Hotels & Resorts president and CEO J. Allen
Smith concurred, though he said hotels would not push for unreasonable rate
increases.
"The corporate clients are incredibly important to all
of us," Smith said. "All of us would think of them as partners, and
we need to treat them fairly in periods of time when we have leverage, as we
hope they would treat us fairly when the leverage favors them."
InterContinental Hotels Group CEO Richard Solomons added
that although the industry is in a "great place," it remained
competitive, and weaker hotel brands or those without solid distribution
strategies would struggle more to increase rates. "We're seeing more and
more winners and losers in this industry," he said.
Loews Hotels & Resorts chairman Jonathan Tisch said his
company also has successfully pushed up group rates, particularly in Miami and
Orlando. STR president and COO Amanda Hite said group rates being negotiated
today for events in 2015 and 2016 are showing "pretty good"
increases.
Hotelier sentiment at the annual investment conference for
the past few years generally has been positive, but this year they spoke in
even more upbeat terms about the industry's outlook. While Sorenson said a
congressional budget deal reached this year was "extraordinarily
superficial," it at least staved off the threat of a U.S. federal government
shutdown, which gives a boost to the U.S. economic outlook.
Elsewhere in the world, Smith reported "remarkable
[revenue per available room] gains" with the exception of "locations
impacted by political strife or disruption."
The executives also briefly addressed the potential for
large-scale consolidation within the industry. In recent weeks, there has been
industry chatter and some published speculation about a supposed rejected $10
billion takeover deal of IHG from an unknown competitor, which some analysts
said might have been Starwood Hotels & Resorts.
Solomons said the chatter was based on a "speculative
newspaper article," and he and other top executives said industry
consolidation was more likely to continue through "organic"
consolidation rather than a merger of two big players.
Marriott, for example, has made its share of brand
acquisitions in recent years including Gaylord Hotels and African hotel
company Protea, Sorenson said. Noting the company would continue to look
for such deals, Sorenson added that he didn't "think it's likely the
really big players will come together."
"There are big challenges associated with that, like
combining substantial rewards platforms," he continued. "We're much
better off with some bolt-on brands or starting new brands rather than pulling
companies together."
Allen said it was similarly unlikely that Four Seasons would
be involved in such a merger.
"The corporate culture and people associated with Four
Seasons are such a defining attribute, the notion of M&A is a tough thing
to get your head around," he said. "The cultural compatibility is
central to everything we do."