The following are excerpts from an original article from Meetings & Conventions Magazine
Hoteliers have been riding high in recent years, basking in the glow of record increases in vital categories such as occupancy and revenue per available room, and with demand growth outpacing supply growth since 2010. But with a new U.S. president in office and a world in flux for myriad reasons, will the good times continue to roll?
M&C recently reached out to several luminaries in the hospitality realm to discuss their outlook for the coming year, particularly when it comes to group business and whether geopolitical and/or economic factors will bring major changes to the industry.
Sources project that supply will outpace demand in 2017 for the first time in eight years. Will this affect the meetings market?
Chris Cahill: The supply side in the luxury and upper upscale in the U.S. and Canada is not really robust. Even if you look at New York City, with the amount of growth there, not that much is at the luxury tier, or even the upper-upscale tier; it's mostly limited-service or boutique product.
Michael Dominguez: Yeah, there is more supply, which is going to help in certain markets, but for meeting planners looking for space? There's just no space available in the U.S., because we haven't built anything significant on an average year-over-year basis since we were back in the peak of 2007. So it's great that we have some extra guest rooms, but that's not going to help if we can't have a meeting.
Frank Passanante: Meeting space actually has seen a continual decline over the last several years. Based on data we have from 2000 to 2009, the hotels that are being built now have 24 percent less meeting space per room. While room supply is catching up with the demand, we're building hotels with less meeting space. As we talk to customers, a common concern that they share is the lack of ability. So we're working to find solutions with our customers, taking a broader look at bundling their meetings business over the next 12 to 18 months or more.
Michael Massari: We've enjoyed somewhere between three and five years of an expansion market, depending on your segment. And it appears that 2017 will add a year to that, and 2018-'19 might add two more. So that would be six to eight years -- one of the longest, if not the longest, expansionary markets seen in the hospitality business. I've been doing this long enough to know that it's not normal. But the indications we have today are that the next three years are going to be quite good.
Peter Strebel: Group business is strong, but we're seeing some challenges in some markets -- it's really specific to the new supply. For example, in Texas, growth is happening in Austin, Houston and Dallas, so we're seeing some more competition in those markets. The same thing goes for a market like Nashville; we've been open there for three years, and it seems like every day there's a new hotel opening there, so that market is under a little pressure now as well. Where we see some pressure on group demand, though, we're able to replace that with surging leisure business. The outlook is still very strong.
Are Trump-administration actions affecting your business?
Strebel: We haven't seen anything positive or negative yet. I think what could be affected is the relationship we have with key inbound countries. I think the rhetoric has a psychological impact on people wanting to travel here. People in many places around the world have in some ways been fascinated with the U.S., and I hope that still remains true.
Massari: International travel is down, so we need to figure out why it's down and how we're going to get it back up, because it was a run of 12 to 15 straight years' worth of increases. We need to continue on our path of 100 million visitors to this country.
With respect to President Trump's executive orders on travel and immigration, we're concerned that the conversation doesn't have enough balance to it. You have to think about what people are hearing. We need to figure out a way to add balance, to be both secure and welcoming.
One thing that gives me promise is that we've got a president who's still doing rallies -- he clearly understands the value of face-to-face meetings. Another thing is that without international travel, our trade deficit would be 20 percent larger; I think a president who is borderline obsessed with exports is going to come around.
I'd be shocked if the president didn't also want there to be 100 million international travelers to the United States. That's good for employment, businesses, tax income and the U.S. trade balance. It's good for everybody. And if you can do it in a safe and secure manner, it's nearly perfect.
Dominguez: There's a lot of confusion out there about the executive orders, and the government has been doing a poor job of communicating them effectively around the world. But international travel started to dip last year, long before the executive orders were issued. I personally think that eventually this will be a small blip in terms of the overall effect on travel, but there's a lot of uncertainty around the world, and uncertainty is never good for travel.
The industry is going to make sure the administration is well-educated about travel, just as we did many times during the Obama administration. But there's a lot of noise in Washington right now, and we want to make sure we're approaching the administration while they don't have several different fires going on.
Passanante: I'm based in Washington, D.C., and I've been around Washington for 25 years. The reality is that with every new administration comes a level of change, and we're obligated to look at all the potential effects of the legislative agendas, and we watch it just like everybody else. Do we expect some things to change as a result of that new agenda? Yeah, probably. Have we seen any impact thus far? No, not really -- not more or less than we would expect to have seen with any other change of administration in the past.
Cahill: People keep thinking this volatility -- on a global basis -- is going to stabilize somehow. But there's a fundamental paradigm shift. I believe there will be increasingly dramatic swings in that volatility, whether because of geopolitical or financial issues, or the threat of terrorism. I don't think our abilities to predict will be as reliable as they were before. People need to be agile, to be able to shift with the changing issues.