NEW ORLEANS—At a panel during last week's AAHOACON, held at the New Orleans Ernest N. Morial Convention Center, hotel industry leaders said the industry could be facing the most challenging time since the pandemic. The panel discussion, A View from the Top: Shaping the Future of Hospitality, was moderated by Jagruti Panwala, past chairwoman of AAHOA and president and CEO of Wealth Protection Strategies.
Hotel owners are struggling in the current environment with challenges such as labor shortages, the high cost of construction and interest rates. Liam Brown, group president, U.S. & Canada, Marriott International, acknowledged the headwinds but insisted "reliance and perseverance are the characteristics of [AAHOA members] and of the industry."
Geoff Ballotti, president and CEO, Wyndham Hotels & Resorts, agreed with Brown but encouraged the audience to remain positive amidst the uncertainty. “Talking to all of you over the last three days, there’s never been more uncertainty in terms of development, but there also does not seem to be a lot of concern out there," he said. "The resiliency of select-service has never been more tested, never been more proven than it was throughout COVID ... I think there is tremendous optimism still out there.”
Uncertainty and Ambiguity
Uncertainty may create a stall, said Keith Pierce, executive vice president, Sonesta International Hotels, but there is plenty of capital out there. Sonesta is in the process of selling 114 hotels and Pierce said four groups were selected as buyers. "I think the uncertainty will be short-lived," he said. "People are investing in the industry."
Tariffs have also created a lot of ambiguity for owners. “Tariffs have created confusion,” said Dan Hansen, head of Americas development and global head of Hyatt Studios and the former CEO of Summit Hotel Properties. He is taking a wait-and-see approach. “How do you access the risk?” he asked. Tariffs can have a direct impact on travel demand, he continued.
Zach Gharib, president of Red Roof, said his company assists its owners throughout difficult times. “We have to make sure we have a smart incentive, especially new development,” he said, and noted the company itself is in “not only new financing, but we are also on the buying side. That way we make sure to help [owners] in the process, because it’s important.”
Speaking specifically for the extended-stay market, Greg Juceam, president and CEO of Extended Stay America, said the segment is “exactly where it’s always been, which is about 10 points higher than the U.S. hotel industry overall, which has been true for a long time," he said. Juceam stated that fluidity in the space comes from the overall business mix and occupancy types on property.
Ritesh Agarwal, chairperson of G6 Hospitality and CEO of Oyo, said 95 percent of G6 franchises are members of AAHOA. At the end of last year, Oyo completed the half-billion-dollar acquisition of G6 Hospitality, the parent company of the Motel 6 and Studio 6. Agarwal met with President Trump a few years ago, and he recalled that Trump said he was a huge believer in the economy and midscale segment of the industry. "If I were to say something to the administration, I would say I'm an entrepreneur," he continued. "In this room full of entrepreneurs, we are all seeking opportunities."
Rising Tides
Danny Hughes, president, Americas for Hilton, maintained that company success directly correlates with ownership success. There needs to be collaboration between both that includes “really listening, taking advice, direction and suggestions from the community,” he said. Hilton does this through advisory councils and questionnaires that keep the company informed on what owners are asking for. “Transparent communication and honesty,” are key to staying successful and navigating through difficult times.
For advocacy efforts, the most important thing hotel owners can do is to "use their voice," said Larry Cuculic, president and CEO of BWH Hotels Group. This applies to speaking with “any group of policymakers, politicians at federal, local, or state levels." Cuculic said it is fundamental that these lawmakers are thoughtful about the policies they’re implementing. “We, as businesspeople, love certainty and when we’re operating and there’s this cloud or fog, it impacts consumer confidence," he continued.