Recent trends in the hospitality industry point towards a decline in leisure travel, but a significant surge in demand from business travelers and groups. CEOs of major hotel chains discussed this shift at the NYU International Hospitality Industry Investment Conference, shedding light on the changing landscape.
Hyatt Hotels Corp. CEO Mark Hoplamazian highlighted the growth in corporate accounts, which have seen a 12% increase through April. He emphasized that business travel is on a steady rise, with positive year-on-year growth every month. This shift signals a change in the industry dynamics, as the focus moves towards catering to the needs of business travelers.
Marriott International CEO Anthony Capuano echoed the sentiments, stating that groups are currently the strongest-performing segment in the industry. He mentioned that group clients are planning bookings five to seven years in advance to secure the desired dates, space, and locations. This trend underscores the importance of accommodating group travelers in the current market.
Accor CEO Sebastien Bazin shared insights on securing rate hikes during annual renegotiations with global corporate accounts. Hilton CEO Christopher Nassetta attributed the pricing power to the limited new hotel supplies entering the market. He predicted a continued super-cycle of low supply growth and increased demand in the coming years.
IHG Hotels & Resorts CEO Elie Maalouf highlighted the need for creativity in the face of changing demands. He mentioned potential projects involving the conversion of under-occupied office buildings into hotels, emphasizing the challenges and costs associated with such endeavors. This innovative approach signifies a shift towards unconventional strategies in the industry.
The rise of business and group travel marks a significant shift in the hospitality industry. As leisure travel declines, hotel chains are adapting to cater to the needs of business travelers and groups. The focus on securing corporate accounts, accommodating group bookings, and creative conversions reflects the changing dynamics of the market. With a continued emphasis on pricing power, limited supply growth, and innovative strategies, the industry is poised for a transformation in the coming years.