More highlights from the annual NYU International Hospitality Industry Investment Conference include conversation about merger-and-acquisition activity, loyalty and the transactions climate.
NEW YORK CITY—The mood was all about realistic optimism at Day Two of the NYU International Hospitality Industry Investment Conference, as topics such as future mergers and acquisitions, global opportunities and the importance of loyalty dominated the conversation.
The big story at hand is Marriott International’s pending acquisition of Starwood Hotels & Resorts Worldwide, and that conversation spurred much speculation about the possibilities down the road of further consolidation among brands and real estate investment trusts.
Through it all, speakers shared the common outlook that hotel deals still are to be had, given proper due diligence and market research, largely driven by the undercurrent of still-steady demand.
Photo of the day
Quotes of the day
“The evolution of loyalty is not as a frequency program, but as a brand. Beyond your stay, we want your time, your share of time while you’re dreaming and booking, and afterwards sharing pictures. No matter how much money we spend, we can’t add time to your day. There’s a big race for your time.”
--Elie Maalouf, CEO, The Americas, InterContinental Hotels Group, on the race for customer time in the travel experience.
“As we move further into the cycle we have to be more creative in finding (acquisition) situations (and find deals) that there’s more to than meets the eye.”
—Tyler Henritze, senior managing director at The Blackstone Group, while talking during the “Anatomy of a Transaction” panel about how the company views the current deals landscape.
“Authentic experiences can’t be scripted, so you have to let people actually be themselves and bring their whole self to work, which includes letting them decide their grooming standards and uniforms and letting people self-determine what they’re going to do and how they’re going to bring themselves into that equation.”
--Mark Hoplamazian, president and CEO, Hyatt Hotels Corporation, speaking during the “Leaders check in” panel.
Tweet of the day
The hotel industry is making headway on its long-time effort to be considered an essential real estate class. Hotel company executives have longed to occupy the same space as retail, manufacturing, office and multifamily residential in the eyes of institutional investors. Perhaps another round of consolidation among the industry’s titans will finally get it over the hump.
The prevailing thought during the NYU International Hospitality Industry Investment Conference was that while the wide bid-ask spread among buyers and sellers is keeping a lot of property-level deals from happening, megadeals such as Marriott International’s pending acquisition of Starwood Hotels & Resorts Worldwide could be replicated sooner than later.
No one offered up any specific companies to meld together but there was talk that having some of the publicly traded REITs join forces wouldn’t be a bad idea. It’s no secret that net asset values for hotel REITs have taken a beating during the past year, so it could be a logical exit strategy for some companies to merge to form bigger, stronger, more-valuable entities.
Panelists on the “A view from the owner’s seat session”—including Mark Brugger of DiamondRock Hospitality Company, Dan Hansen of Summit Hotel Properties, Kirk Kinsell of Loews Hotels & Resorts, Tyler Morse of MCR Development and Suril Shah of Starwood Capital Group—were among the attendees who said the notion has merit, even though there would be some hurdles to clear. That’s a pretty smart group of executives, so no one should be shocked if it happens.
--Jeff Higley, Editorial Director
We’ve known how important loyalty programs are to hotels for some time now, but the topic really took on a life of its own this week in New York. Every brand CEO who took the stage spent considerable time pitching the benefits of his company’s particular loyalty program—more so than I’ve ever heard these programs touted before from the main stage.
It’s clear that brands see loyalty as the best way to the customer’s heart. After all these years of product innovation and brand strategy, they’re scrambling to make that pay off by winning the loyalty race. I think companies see it as a “kill two birds for the price of one” strategy—not only does growing loyalty keep customers coming back, it also keeps online travel agencies and other disruptors at bay.
Speaking of disruptors, Airbnb wasn’t the hot topic it has been in years past. The industry has acknowledged Airbnb and its shared-economy cohorts and moved on, it seems.
--Stephanie Ricca, Editor-in-Chief
This year’s conference has been one long story about different perspectives. While the view from oil markets has been bleak, most of the rest of the country has looked good. There is reason for investor pessimism when looking at the U.S. in the short term, but there’s almost unbridled optimism about the global travel outlook in the long term.
One of the more interesting perspectives that I’ve heard from a few different people over the last few days is it seems like some in the industry are hitting the cold feet stage of Marriott International and Starwood Hotels & Resorts Worldwide’s months-long engagement.
“I think I am a little bit concerned,” Hersha Hospitality Trust president and COO Neil Shah said during the IREFAC panel. “I’ve been supportive of the idea of the brands getting together and consolidating will give us more leverage against the OTAs and other disruptors in the space, but it also does give you more leverage against owners.”
--Sean McCracken, News Editor