If there was one consistent theme throughout NYU’s 2016 International Hospitality Industry Investment Conference, it was “divergent views.” From the economic health of the industry to the current and potential impact of industry disruptors, there was little consensus and plenty of varying perspectives on key industry issues. Here are the top five issues at the conference, as identified by leaders of Deloitte’s Travel, Hospitality & Leisure Industry practice who attended and participated in sessions at the conference, held in early June.
1. The cycle: Golden age or entering darkness?
STR revised its 2016 U.S. RevPAR forecast from 5.0% down to 4.4% growth due to a weak Q1. Even with the downward revision, many hotel brand executives remained steadfast that the cycle remains intact, with many referring to the current state of the industry as the “golden age of travel.” On the flipside, the many underlying owners of hospitality real estate assets (the REITs) remained cautious, with a number indicating that they were looking to divest of hospitality-related assets in order to buy back stock or reallocate to other asset classes.
2. Pipeline supply: Under control or underestimated?
Many brand executives remained relatively unconcerned about the current amount of supply in the pipeline, pointing to STR’s projections for supply growth to remain below or at long-term averages through 2017. As Arne Sorenson, CEO of Marriott International, emphasized, the industry has never had a supply-induced downturn. The REITs took a contrary position, with many expressing concern about the current supply pipeline as evidenced by the amount of new construction. One executive noted that while lending standards have tightened over the past six months, the industry’s “debt stack” has not decreased since the Great Recession.
3. Industry “disruption”: Foe or fiction?
The divide on the impact of new models like Airbnb remains wide. Industry advocacy groups re-emphasized the need to regulate Airbnb to ensure that everybody in the hospitality and lodging space is playing by the same rules. However, many brand executives remained relatively muted on Airbnb—a divergence from previous industry conferences. Chris Nassetta, CEO of Hilton Worldwide, said, “We can co-exist with Airbnb. … We all watch what each other is doing quite carefully, and I don’t think it’s all bad. They’ve been able to build quite a nice relationship with their customers … and their hosts.”
4. Technology: Accretive benefit or a new reality?
Technology remains an influential industry topic with the amount of technology-related investment at all-time highs. However, there continues to be differing opinions on how technology should be leveraged within the context of the customer experience. Many look at it as a means to simplify the experience by removing key friction points while emphasizing the human connection as the core of the experience. Others are looking to emerging technologies like virtual reality to reinvent the experience and enable guests to interact with hospitality in ways never imagined before.
5. Customer loyalty: Product or program?
Many brand CEOs spent a significant amount of time discussing customer loyalty. Some emphasized product innovation and the underlying experience delivery as a key to winning over the hearts of customers, while others discussed the importance of leveraging loyalty programs as a means to keep customers in the system through incentives. One thing everyone could agree on: the need for authenticity and direct connection—whether that is in how loyalty programs can be customized to meet ever-evolving preferences or in how big data can be leveraged to understand the needs of each guest to create a more personalized and emotive experience.
This list was compiled by Deloitte’s Travel, Hospitality and Leisure Industry group, with insights from Stephen Jennings, U.S. hospitality leader and principal; Guy Langford, U.S. THL leader and partner, and Adam Weissenberg, global THL leader and partner.