NEW YORK CITY—There's a reason NYU called them the “titans of real estate.”

In a wide-ranging discussion at the school's International Hospitality Industry Investment Conference last week, industry heavyweights Jonathan Gray, global head of real estate, Blackstone and Barry Sternlicht, chairman and CEO, Starwood Capital Group provided frank and not-often-heard views on the state of the economy, threats from new hotel supply, the impact of the rising dollar, what's ahead for Starwood Hotels & Resorts and more.

“We're not at the end of things—the economy will have steady growth over the next few years and the hotel business should do well—but we're past the huge upswing,” declared Gray. “And we're seeing more supply in some markets, like New York City, Miami, parts of Texas and of China. There is weak RevPAR there so we're cautious in those markets.”

Added Sternlicht, “We're in a goldilocks economy, it's not too hot and it's not too soft. The banks are somewhat cautious and you are seeing pockets of new supply at the same time that the dollar has appreciated, particularly against the Canadian dollar.

“So we'll see a different demand pattern in Miami this summer,” he continued, “as the Brazilian currency has halved.”

Still, both magnates expect to find more foreign capital flowing into the market. “I think it's early days for foreign investment, especially in terms of US properties being bought by investors from China,” asserted Gray. “Insurance companies there only got the right in the last year to invest overseas, which is why we saw deals like the Waldorf-Astoria NY trade, where they spent about $1300 per square foot.”

“There's so much liquidity in the world,” noted Sternlicht. “China is underweighted relative to other sovereign nations. The country is in many asset classes, even homes in Orange County. And they're not short term investors, they're looking at 20 year-holds.”

And the rise of the select service segment with hotel investors and owners, full-service operations are becoming a challenge, Gray indicated.

“Outside of major destinations, running hotels with 24-hour room service, bellmen, etc. is increasingly difficult so you're seeing a move to “full-service light, such as the Doubletree brand,” he said. “It's happening in emerging markets, as wage rates go up in China, they're going to look at select-service. That's the biggest mega trend in the hotel business.”

A trend that's on the horizon is consolidation. “Could I see a company like La Quinta becoming part of a larger brand?” Gray asked. “Yes, it's an increasingly global business.”

Sternlicht mulled the future of his former hotel company, Starwood Hotels & Resorts, which is currently in some turmoil. “CEOs Chris Nassetta [Hilton], Mark Hoplamazian [Hyatt] and Arnie Sorenson [Marriott] did a good job addressing technology that I think Starwood didn't do. And Starwood wasn't easy to do business with while Marriott, Hilton and Hyatt were willing to bend.

“If you think of Marriott or Hilton today, they don't need Starwood,” Sternlicht declared.  However, noting that no one knows for sure what's going to happen, he said, “consolidation is happening across all industries.”