New York
- While being coy about exact percentages, hotel company CEOs this week said corporate
travel buyers should expect 2013 rate hikes when negotiations begin this
summer.
Speaking here at the New
York University International Hospitality Industry Investment Conference, several
chief executives said they remain optimistic regarding short-term forecasts
despite ongoing economic concerns, particularly high unemployment. Such
optimism stems from expectations that demand will hold up through the corporate
rate negotiating period, said Hyatt Hotels Corp. president and CEO Mark
Hoplamazian. "If you look at the core customer base we're serving, the
employment issue for that base of travelers is much better than the average is,"
he said. "For the remainder of this year, we're seeing demand as quite
positive."
NYU Tisch Center for
Hospitality divisional dean Bjorn Hanson said hoteliers indicated they are
aiming for corporate rate increases of about 7 percent. Buyers, meanwhile, are
planning for increases closer to 3.5 percent, he said.
"It's early, and it's
a pretty big gap, but my guess is it will be somewhere in between [those
numbers]," Hanson said. The CEOs during their appearances at the conference
declined to assign a number to their goals
Hoplamazian said
bookings on group rates in the first quarter were up 5 percent to 6 percent
year over year, and transient rates also were up significantly. "If we don't
have a significant downturn in the economy, we expect [corporate rates] to be
higher, but at this point, it's too early to be prognosticating."
Marriott International
president and CEO Arne Sorenson said that hotel performance is up across every
market in the United States, although Washington, D.C., is the weakest because
of cuts to government travel and the upcoming election. STR founder and CEO
Randy Smith said one of the biggest threats to summer demand—rising gas prices—is
stabilizing, giving more strength to summer forecasts. TravelClick executive
vice president of global business intelligence Tim Hart noted that
strengthening leisure pricing would "pave the way for negotiated rates."
Even so, given economic
uncertainty, hotel CEOs are a little less bullish on their long-term forecasts.
"The markets are not infallible, but they are a read on future
expectations," Sorenson said. "Right now, they are more cautious
about our future than they were a couple of months ago."
Current signs, however,
point to long-term strength for the hospitality industry, Hart said. "Something
bad could happen," he said, "but the dominant story is that we're
very resilient."