According to experts at the NYU International Hospitality Industry Investment Conference, the U.S. hotel industry has reasons to be optimistic, but it also faces challenges in realizing its full potential. While U.S. outbound travel exceeds inbound demand, a panel discussion focused on the need for a more coordinated approach to facilitate international travel to the United States.
Many travelers are currently avoiding the U.S. due to the strong dollar and lengthy visa wait times that can extend for months or even years. The experts emphasized the importance of reminding global travelers about the U.S.'s long-standing reputation as a premier international destination.
The U.S. travel industry will have two significant opportunities to showcase its strengths in the coming years: hosting the World Cup in 2026 and the Summer Olympics in Los Angeles in 2028. Geoff Freeman, president and CEO of the U.S. Travel Association, highlighted the potential impact of these events, stating, "That's 8 million people going home and talking about their experience in the U.S. and how it may have exceeded their expectations, encouraging other people to go. The best marketing we can have is obviously the word-of-mouth marketing that we can get from these visitors."
The Role of Artificial Intelligence in the Hotel Industry
The impact of artificial intelligence (AI) on the hotel industry was a topic of intense debate during the conference. While some executives downplayed the short-term effects, others acknowledged the potential benefits of AI in areas like revenue management and predictive staffing.
However, Warren Fields, president and CEO of Pyramid Hospitality Group, emphasized that the guest-facing aspect of the business cannot be replaced by technology. "The guest-facing part of our business will never go away. It can't," Fields said.
Challenges and Opportunities for Hotel Owners and Developers
The current interest rate environment in the U.S. has had mixed consequences for hotel owners and developers. While steady interest rates provide a sense of certainty, the rates remain higher than desired by many in the industry.
Some hoteliers view the situation positively, arguing that rates were kept too low for too long, and even the current levels are not historically high. Others recognize that the industry's fundamentals remain strong, and it may be better to proceed with deals now rather than wait for a potential surge in supply if rates eventually decrease.
The industry is closely monitoring the Federal Reserve's actions regarding interest rates this year. Regardless of the outcome, there is a growing belief that it is advantageous to move forward with projects while hotels are still performing well.
The Value of Partnerships and Experiences
While the conference focused on hotel investments, many conversations centered on the importance of delivering exceptional hospitality experiences for guests and how this translates into value for owners, franchises, and company expansion.
The Industry Real Estate Finance Advisory Council (IREFAC) emphasized the value of growth through experience alignment. Hilton CFO Kevin Jacobs predicted more partnerships for Hilton, similar to the company's recent collaboration with AutoCamp. He stated that in five years, Hilton will be "like it is today but bigger, because we'll have more partnerships... that we can connect through our loyalty program... without having to build those companies ourselves."
Other executives discussed partnerships with cruise lines, yachts, and other experiences as "a great way to grow" compared to building new brands from scratch, according to IHG Hotels and Resorts Chief Development Officer Julienne Smith.
Source: CoStar