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CEOs Soaking Up The Sun At the NYU Hospitality Conference the CEOs are feeling nearly giddy at the current and future state of the business. Tuesday, June 05, 2012 Glenn Haussman

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The major companies are running with the bulls. No, they haven’t picked up and moved to Pamplona, Spain; they’re riding the wave of the upward cycle and it’s making them very, very happy. Here at the annual NYU Hospitality Investment Conference spirits are high and corporate leaders are giddy about the current state of hospitality affair on a global basis.

Industry leaders are expecting to reap rewards for years to come as the market continues to not just see strong demand, but believe the ability to push rates will continue for years to come. Some are arguing that we’re on the cusp of new halcyon days which will soon propel the industry as a whole past peak levels experienced back in the heady days of 2007 and 2008 before the Great Recession.

“We are optimistic people want to travel for business and for personal reasons,” said Eric Danziger, President and CEO of Wyndham Hotel Group who said that call center volume is up 30 percent while web traffic to Wyndham Hotel Group related branded websites is up between 30 and 40 percent. “We believe it will continue this year and into the next.”

Mark Hoplamazian, President and CEO, Hyatt Hotels Corp., agrees. “The remainder of this year we are seeing demand profile that is quite positive,” he said.

Interestingly, he is not overly concerned about the weak employment figures put out this past week that showed unemployment at 8.2 percent of Americans. Though he would like to see more Americans get back to work, he explained Hyatt hotels do not serve the entire U.S. population, just the ones most likely to travel. That is people who are employed and travel for business, group meetings and more. “The employment picture for that base of travelers is much better than the averages. We are living in a demand environment,” said Hoplamazian.

He cited the sharp increase of group business in the first quarter 2012 which was up nine percent as just one example. And transient business is also seeing strong demand which is giving hotels the ability to raise rates.

But group business is not bringing in top rates because today’s group customer is paying rates negotiated long ago. Anywhere between six months and several years so it takes time for those rates to work their way through to paying stays.

New York University’s Divisional Dean, Clinical Professor, HVS Chair,  Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management said group rates will group rates will go up, but by how much yet is still not clear. He said in conversations with room buyers and hoteliers there is still a great divide between how much 2013 rate will go up. The buy side is 3.5 percent while the sell side wants 7.0 percent.

Meanwhile, Gerald Lawless, Executive Chairman Jumeirah Group said he believes tourism will remain strong in the regions where he has hotels such as Europe. “It will be quite the bonanza for European tourism this summer and I think that will continue,” said Lawless.

Arne Sorenson, President and CEO, Marriott International said “I tend to think business will perform because of strong demand, but you can’t entirely ignore what the [stock] market is saying too.”

The stock market is of course has been sinking but there can be a disconnect between what is going on with the confidence in how people see a stock’s price compared to how people travel.

Of course the hotel companies were downright giddy at the prospects of future growth in areas such as China and India and see these areas as major places for sustained growth potentially for the rest of people’s careers.

“Everywhere where economies are growing most is rich with opportunity and we are going to mine that in the years and decades to come,” said Sorenson.

In fact Marriott has a multi-pronged strategy to grow the full service and select service business. Already there are 20 Marriott hotels with flags such as JW Marriott, Renaissance and Marriott as well as 10 Courtyard by Marriott hotels.

There are between 40 and 50 Marriott branded hotels in the pipeline for future hotels. Sorensen said the company is looking to adapt its Courtyard brand for the Indian market going forward rather than create an entirely new brand.

“It will be unique and will look different than in those in the U.S. and Mexico. We developed [the hotel] with heavy input from the Indian traveling customer,” said Sorenson who said that 90 percent or more of the people staying in India based Courtyard hotels will be Indian. “It will be Indian and it is in many respects a separate platform.”