Hospitality is the best place to be working in this economy

There’s no better place to be working than in hospitality. That’s true today and will remain so in the future.

That’s the message I took away from investors and operators at the NYU International Hospitality Conference.

Reading the news and participating in the markets as an investor too often makes you want to unplug from it all and go live a monastic life in the wilderness. But listening to hospitality operators, investors, strategists, and bankers reveals hospitality as a bright spot in a cloudy world.

A changed consumer

Travel is one of the last things people will stop spending on, IHG CEO Keith Barr said.

Sloan Dean, CEO of Remington Hospitality, made the case for the change in consumer spending patterns being permanent. The Great Depression changed our grandparent’s psyche. In the same way, Covid will drive lasting change for millennials in what they value.

Marriott CFO Leeny Oberg agreed. Consumers are not taking travel for granted anymore. They are not assuming it will always be readily available.

Flexible work arrangements for many haven’t hurt. Fridays are flexible and it’s like the weekend has increased by 50%, said Margaritaville CEO John Cohlan.

Rebounding group travel

Group business is raging, shared Hilton CEO Chris Nassetta. Pre-Covid 80% of our business was SMEs. They were quite resilient and now they’re back over Covid levels. When times get tough for them, we expect they’ll be even more likely to travel.

International travel just starting up

We don’t even have inbound travel yet and we’re doing really well, Nassetta said. Chinese travel is coming in the second half of the year, he predicted, which is important, as China was the largest outbound market pre-Covid and should be again soon.

Constrained supply

The historical average supply growth – the number of new hotels entering the market - is around 2.5%. Right now we’re seeing 0.4% supply growth, which I’d argue is really zero with hotels becoming obsolete, said Nassetta.

Typically something of interest to investors, the takeaway for operators is the ability to maintain high prices with the momentum in demand mentioned earlier.

Long-term changes in demographics

Accor CEO Sébastien Bazin spoke to new emerging markets that represent new demand sources. Watch out for India, he said, as the middle class of that country is expected to exceed 500 million in 2025 – more than double that of the entire United States.

Ask yourself: Do you believe in the long-term potential of travel? We do, said Mit Shah, CEO of Noble Investment Group, a firm with more than $5 billion in assets under management. The long-term opportunity is the tailwind of demand coming in the decades ahead.

The demographic trends and consumer shift in demand from goods to experiences make the long-term outlook the golden age of hospitality, said Hilton CFO Kevin Jacobs

It’s important for everyone to hear about the potential in hospitality - not just the executives and investors at this conference. We all need to understand the reasons to be optimistic about a bright future for the industry if we’re going to invest our careers here, build cool stuff, and recruit people to join us.

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Josiah Mackenzie hosts the Hospitality Daily Podcast to help you stay informed and inspired.