LOS ANGELES — The JW Marriott Los Angeles L.A. Live seemed to be a microcosm of the larger dynamics at play for the hotel industry during the second day of the Americas Lodging Investment Summit.
Inside the host hotel Tuesday, optimism abounded about the potential for industry growth in 2023, while outside, workers from Unite Here Local 11 protested over wages that have not kept up with the costs of living during a period of historic inflation.
It doesn’t take much effort to draw the parallel lines between this and the larger economic dynamics for an industry that expects revenues to grow during an economic recession for the first time in history. Hoteliers seem to be banking on happy days in the eye of the storm in 2023.
“My best contribution to our company is pretty simple. I am just kind of the head coach. I like to coach; not command, not demand but act more like I am on their team because they’re definitely on mine.”
— Mark Laport, president and CEO at Concord Hospitality Enterprises Company, on his greatest responsibility as a leader of a company.
“I think the industry really missed an opportunity to really understand the evolution of the customer, what’s important to the customer and rewrite the rules. We did what we shouldn’t have done and went right back to how we did business before the pandemic while the customer has changed.”
— Ted Darnall, partner and CEO of lodging and technical services at HEI Hotels & Resorts
While this is an investment conference and a bulk of the conversations are swirling around money and deals, hotel executives have made a commitment on Day 2 of ALIS to weave in discussion about ESG on the main stage. I think Michael George of Crescent Hotels & Resorts said it best today: Leaning into and pushing change for diversity, equity and inclusion as well as environmental stewardship within organizations will ultimately reduce employee turnover and increase guest satisfaction. Paired together, those factors result in companies making more money.
In terms of deals, based on the conversations I’ve had today, I think plenty of mergers-and-acquisitions activity and strategic partnerships will come to fruition in 2023. For example, Peachtree Hospitality Management’s Patrick Short shared with me today his company formed a long-term partnership with HOS Management. The strategy for Peachtree is finding companies that will add multiple properties to its portfolio instead of doing one-off deals, and I’m willing to bet we will see a wave of deals like that.
Finally, when asking brands and ownership, management and development companies what their stances are on ground-up development in this environment of high interest rates and difficulty in obtaining construction loans, it seems they’re not as dour about it as I anticipated them to be. Many have strong pipelines ahead and are still inking development deals today.
—Dana Miller, senior reporter
Over the past couple of days, I’ve heard more than a few people bemoaning the fact that after a period of strong profitability, costs continue to creep up, putting a damper on a period of continued strong demand and rate growth. While many have pointed at the brands for drawing a firm line in the sand in an effort to return to pre-pandemic standards — after giving owners and operators some relief during the depths of the pandemic — others made a more stark diagnosis of what’s happening right now: The hotel industry never really learned a lesson over the past three years.
This line of reasoning goes something like this: While many have applauded a new level of operational efficiency at hotels that allowed more revenue to flow through to the bottom line, very little of that came from any desire to actually change the operating model of hotels. Hoteliers cut back on daily housekeeping and unprofitable food-and-beverage outlets out of absolute necessity during the record-low demand levels of 2020 and the labor crisis that followed it. Now those same hoteliers seek to return those services to normal, instead of imagining new ways to deliver higher levels of service and not ballooning costs.
I’m not saying this is or isn’t true, but that was the most starkly pessimistic message I heard cutting through the rampant optimism here in Los Angeles. And if it’s true, it says a lot about the industry actively passing up on the opportunity to reinvent itself and innovate in meaningful ways.
—Sean McCracken, news editor
Technology is absolutely something the hotel industry needs to invest in, either directly or through working with third-party vendors, to better secure themselves and improve working conditions for employees and the overall hotel experience for guests. That said, it’s reassuring to hear executives say that while they see the necessity and value of more innovative technology in hotels, it should be treated as a tool and not as a replacement for people.
During the “Boardroom Outlook: People — Cultivating the Most Valuable Asset” general session today, several executives spoke about how tech should be used to make employees’ jobs easier to provide hospitality to guests, not to remove them from the equation. Apps, kiosks, mobile messaging, delivery robots — those are all great, but they’re tools to enhance the guest stay by making things easier for the guest or enabling more engagement with hotel staff through better communication or freeing them up to provide other, better service.
The labor shortage throughout the pandemic has been a constant, though lessening, pain point for hoteliers. Tech, to some degree, has been a solution in making up for some of that, but that’s not what creates the hospitality experience hoteliers want to provide.
—Bryan Wroten, senior reporter