Leaning Into Leisure
Hospitality Leaders See Paradigm Shift Driving Further Industry Growth
Marked increases in leisure lodging demand are being driven by a paradigm shift in consumer thinking following COVID and will continue for the foreseeable future, according to a number of hospitality leaders at the recent Lodging Conference in Phoenix.
Speaking during the “Leaders In Hospitality” general session, the panelists also addressed the increasing importance of data in today’s lodging landscape and they assessed current conditions.
Sloan Dean, CEO/President, Remington Hotels, pointed out that the COVID pandemic has “set the mindset” of the younger generation comparing it to how older generations were impacted by the Great Depression of the 1930s. He also highlighted some of the benefits for the industry.
“Everybody is talking about the recession, but no one is talking about how this is going to change the consumer behavior of people that were locked in their houses for two years. There are countless examples of this [younger] generation being materially different. We were asked when is leisure going to pull back; it’s not. There is always going to be more leisure demand than there ever was pre-COVID and it’s going to compensate the industry in a big way. That’s why we’re getting rate and rate growth will continue even in a recessionary environment,” he said.
Liam Brown, group president, U.S. and Canada, Marriott International, added some further context around the changes and future outlook.
“The Great Depression is a great analogy because that was a pivot point in history in terms of the world moving from a six-day work week to a five-day work week. We’ve already seen it [the impact of COVID] in how people work, live and do all sorts of different things. Leisure has been growing four times faster than business for years so I think we are poised for continued success and very different behaviors,” he said.
Larry Cuculic, President and CEO, Best Western Hotels & Resorts, reinforced the point.
“I do believe that the pandemic defined the younger generation, but I also think it refined the older generation. I think it amended how we all look at travel quite honestly and that’s why I don’t think it’s going to slow down. Our forward-looking reservations for the next six months are consistent with that period pre-pandemic and the plus is, in fact, they’re staying longer. So now you’ve got that same ‘booking rate’ with a longer stay and higher ADR, which means I think we can leverage that in the next six months. That will take us through that period into spring and another great summer in 2023,” he said.
Michael Lipson, Chairman/CEO, Access Point Financial, weighed in as well.
“The consumer has definitely changed and I do agree 100% that leisure will not pull back. People have figured out this is more important for my future,” he said.
Lipson went on to highlight the need for the industry to collectively improve performance by better utilizing data and enabling hotel staff to better serve the guest.
“You can’t control the person in the hotel per se that’s staying overnight, but what you can control is the staff that is serving that customer. So you need to do a good job of putting the data in front of them,” he said.
Neal Patel, 2022-2023 Chairman, AAHOA, elaborated on the point and put it in more practical terms.
“How can we use that data to give more ROI [return on investment]? I think that’s the future. We have to utilize data and let’s put that on paper and [figure out] how can we get more ROI from it,” he said.
Brown pointed out some of the different approaches globally while stressing the importance of data protection regardless of where you are in the world.
“The population in the U.S. seems to give it away. Outside the U.S. people have data privacy and using their data in the right way is very, very important. I think that’s one thing we have to be very respectful of and very mindful of. It’s an obligation that any personal data we have that we use it wisely and with the right permissions because I think there’s a lot more of that in our future than we potentially realize,” he said.
To that point, Patel urged the lodging industry as a whole to move away from cloud storage and to decentralize its servers to further protect data “so it’s not so easy to hack.”
He continued, “when you decentralize things you’re splitting everything up in different fragments and you’re making it so much more safer. Privacy and security is such a concern for our industry and we’re just getting started when it comes to big data and analyzing it,” he said.
Lipson, meanwhile, offered a lender’s perspective on current conditions while expressing optimism in general.
“I think it’s a great time to be in the hospitality industry wherever you are, be it an operator or be it an owner. But you need to reset some of your thinking, the free money is gone. So yes it’s going to take a little while to readjust. However, I don’t think values are going to dramatically go down because there are buyers and sellers,” he said.