Hotel CEOs See Strong Group Business Rebound

Hotel chief executives speaking today at New York University's International Hospitality Industry Investment Conference said group business is propelling the industry's recovery and that they expect it to become a bigger portion of their overall volume in coming years.

Hilton Worldwide president and CEO Christopher Nassetta said group business in recent months has rebounded much more quickly than expected. While year-over-year group business in November and December was down about 15 percent, by the end of April, it was up 7 percent.

"It's not the kind of group we're necessarily used to, and it's not necessarily altogether the groups we want longer-term: very short-window, small- and medium-sized groups," Nassetta said, "but that's where we're seeing the most momentum."

Typically in downturns, group and transient business demand decline in comparable levels, said W. Edward Walter, president and CEO of Host Hotels & Resorts, which owns 110 hotels, largely in the upper upscale and luxury tiers. In the past two years, however, Host saw group room nights fall in the 18 percent to 20 percent range, compared with a 4 percent to 5 percent decline in transient room nights, he said. While group typically represents about 42 percent of Host's business, it has fallen to about 37 percent, according to Walter.

Even so, Host has been investing heavily in group business infrastructure, including about $250 million in its ballrooms across the United States, Walter said. "As we see group business recover, our expectation is that we'll not only get back to the 42 percent level but that we'll get higher than that," he said.

Hilton's Nassetta said the downturn also has shown the fragility of group business as it relates to political rhetoric. "A couple of bad comments can destroy that piece of business pretty rapidly," he said.

Choice Hotels International president and CEO Stephen Joyce said the industry has made headway in communicating the return on investment of group travel to keep its growth moving. "We've got a number of politicians who have learned now the cost of bashing travel and intimating travel is just a bunch of fat white guys smoking cigars on the golf course," he said.