During the NYU International Hospitality Industry Investment Conference, hotel CEOs discussed the evolving dynamics in the industry. While the leisure travel sector may be experiencing a slowdown, there has been a surge in demand from business travelers and groups that is offsetting this trend.
Hyatt Hotels Corp. CEO Mark Hoplamazian noted that while the company is still growing in leisure, the focus has shifted towards business travel this year. Corporate accounts at Hyatt have seen a 12% increase through April, with the business travel segment growing by 6% year over year.
Marriott International CEO Anthony Capuano highlighted that groups are now the strongest-performing segment in the industry. Group clients are looking to book events five to seven years in advance to secure desired dates, venues, and cities. Accor CEO Sebastien Bazin mentioned that the company was able to secure significant rate hikes during annual renegotiations with global corporate accounts. Hilton CEO Christopher Nassetta attributed this pricing power to the relatively scarce new hotel supply, predicting low supply growth in the coming years while demand continues to rise.
Capuano also mentioned that lending for new construction has reduced, leading to a competition among hotel chains for conversions. IHG Hotels & Resorts CEO Elie Maalouf discussed his company’s need for creativity in conversions, mentioning a project involving the redevelopment of an under-occupied office building in New York City into a hotel property. While converting offices to hotels can be costly, Maalouf emphasized that strong demand in the market makes it a viable option for developers willing to think outside of traditional development models.
