Los Angeles - Multibrand hotel company CEOs speaking at the Americas Lodging
Investment Summit here projected strong demand and rising rates for the next
several years, as most do not expect economic challenges in Europe to have a
significant impact on their business.
Hyatt Hotels Corp.
president and CEO Mark Hoplamazian said corporate transient demand was strong
in 2011 and that "transient dynamics in the U.S. continue to be good."
He added that group demand also increased last year but lagged transient demand.
Booking windows, Hoplamazian said, "are not getting shorter but not
lengthening out, which is my key in keeping tabs of corporate confidence."
According to Carlson
president and CEO Hubert Joly, "More companies are planning to increase
travel than are planning to cut travel. We have some economic headwinds, so it
seems like travel has some legs, here."
Those trends coupled
with little hotel development in the United States should translate to strong
performance by U.S. hotels during the next four to five years, said Choice
Hotels International president and CEO Stephen Joyce. "We're still seeing
struggles to get development going, and financing markets won't improve anytime
this year, so there will be no real new inventory until 2014 or 2015," he explained.
"The supply-demand balance is better than I've seen in 20 years. We'll
have a good run, regardless of the economy, and if we get some help from the economy,
we'll have a really great run."
Given such conditions, CEOs
representing upper-tier hotels perceive an environment ripe for rate increases.
But Joyce said rate increases would be more difficult to achieve in the lower
tiers—which is primarily where Choice has a presence—because those tiers' customers
are more sensitive to price. As such, Joyce said he expected some corporate
travelers to trade down as the price differential between midprice and upscale
grows.
"Business customers
[in 2011] were up 16 percent year over year, those formerly staying in upscale
properties," Joyce said. "I don't think that's a short-term
phenomenon. It's here to stay for the foreseeable future."
Although the CEOs said
Europe's economic instability would lead to decreased travel within Europe—particularly
as governments embrace austerity—they said they did not expect it to affect
global travel demand.
"It remains an area
of a lot of stress and concern, but the business impact on us today is very
modest, given the presence we have there is at the high end of the market in
most key cities," Hyatt's Hoplamazian said. "The guests there are
mostly from global markets, and if you think about demand as a global metric
and not just intra-European, all the major companies showed RevPAR growth
through December."
InterContinental Hotels
Group CEO Richard Solomons similarly said he did not expect Europe to have a
large effect on his business, as the bulk of IHG's properties are in the United
States and the bulk of development is happening in emerging Asia/Pacific markets.
"For us as a company, the U.K. and Europe are important but a small part
of our business," he said.