It's not often we reporters have access to a bunch of the big boys and gals in the hotel industry—let alone access to a bunch of them all in one room. But that all changes during the annual “CEO coffee talk” event at the NYU Hospitality Investment Conference.
During 45 highly caffeinated minutes, we get free rein. The answers aren’t always as candid as we would like—perhaps event planners should start serving booze—but responses do shed some interesting insight into what CEOs of the world’s largest hotel companies are thinking.
Here’s a roundup of some of the more interesting comments:
Housekeepers and hotel security
First, stop calling them “housekeepers.” The correct terminology, said Bjorn Hanson, divisional dean of the NYU Tisch School, is “room attendant.”
So what are the big brands doing to protect their—ahem—room attendants in light of some high-profile sexual assaults? Don’t expect immediate action. They’re still looking into it.
“We’ve spent time thinking this through and trying to assess the issues that we’ve seen,” said Hilton’s Chris Nassetta. He warned against knee-jerk reactions while underscoring the need for safety. “We have not had any systemic issues with this,” he added.
“Our industry depends on the safety not only of our associates but of our guests,” said Frits van Paasschen of Starwood Hotels & Resorts.
Here’s one I’m sure van Paasschen loved getting out …
Barry Sternlicht, the real-estate icon and head of Starwood Capital Group who previously worked at the other Starwood, said that back in the day the latter didn’t have its own true-blue yield management system. The program simply tracked the rates of a high-profile competitor—which is legal, mind you—and generated rate recommendations based off the benchmark.
Van Paasschen, who was quick to crack a good-hearted smile at the revelation, was only slightly less quick to emphasize Starwood Hotels & Resorts now operates with its own fully proprietary system.
The blind pools
Sternlicht also offered a quick history lesson on the emergence of blind-pool REITs during the past two years:
“There are three blind-pool hotel REITs that were born in this cycle because institutional investors were a little worried about some of the legacy companies like our friend in Chicago, Laurence Geller’s Strategic (Hotels and Resorts) and Morgans and these companies that had very bad balance sheets—good assets but terrible balance sheets. So they created these three new REITs, and their whole goal was to go out and spend money as fast as they could so they could get more money. That really became the marginal buyer. The marginal price in the hotel space was set by those three blind-pool REITs … The markets have rewarded the public companies for being this aggressive, and so it feeds on itself.”
While Sternlicht didn’t name them, the three blind-pool REITs launched during this downturn were Chatham Lodging Trust, Chesapeake Lodging Trust and Pebblebrook Hotel Trust.
Airlift and demand
Airlines are getting smarter—if not more judicious—when setting capacity levels. The number of available seats is down compared to previous peaks. However, the CEOs don’t think a decrease in airlift has necessarily impacted hotel demand.
“It has not had a negative effect on corporate travel,” said Hubert Joly of Carlson, before adding the company is mostly focused on corporate business right now.
While van Paasschen did admit that “there’s no question that airlift is critical to the health of our industry,” he also said global airlift has actually increased significantly in the past few years.
Added Sternlicht: “The expansion of some of the emerging market airlines is dramatic.”