Hotel CEOs Check In, Like the View

NEW YORK CITY-Five out of five hotel CEOs agree: the global outlook for the sector to grow RevPAR is bullish despite prevailing headwinds and what Carlson’s Huber Joly called “uneven” economic indicators. That was the key takeaway from this year’s “CEOs Check In” panel that began the 33rd Annual New York University International Hospitality Industry Investment Conference on Monday morning. All five panelists offered moderator Lalia Rach, a clinical professor with NYU’s Preston Robert Tisch Center for Hospitality, Tourism and Sports Management, a variation of Hilton Worldwide CEO Christopher Nassetta’s summation: “What we see right now, notwithstanding what you read in the papers, is quite positive.”

While agreeing generally with his fellow panelists—who also included IHG’s CEO-designate Richard Solomons and Four Seasons CEO Kathleen Taylor—Frits van Paasschen sounded a note of caution. The Starwood Hotels & Resorts CEO pointed to the fiscal situation, “not just in Europe, but also in the US.”

The domestic fiscal uncertainty also loomed large in the “Power of Private Equity” panel featuring Blackstone’s Jonathan Gray and Starwood Capital Group’s Barry Sternlicht, moderated by CNBC anchor Maria Bartiromo. “You’re going to have a very divisive election next year,” warned Sternlicht, chairman and CEO of Starwood Capital. “That is going to freeze businessmen again,” as the capital markets collapse did in 2008.

It’s against such a backdrop that participants on both panels talked about looking overseas. Gray, co-head of real estate at Blackstone, noted that Hilton—owned by the private equity giant—would soon have 30,000 keys in Chinese markets. That sounds like a lot, Gray said, until one considers that the company has 500,000 keys in the US, a nation one-quarter the size of China.

Similarly, although all five companies in the discussion moderated by Rach were nominally headquartered in the US, all five CEOs anticipated achieving most of their growth in the coming years from China and other emerging markets. Nassetta noted that it’s important to not merely plunk domestic brands down on foreign soil, but also to understand what’s important to the local customers in these markets. Conversely, he advocated taking learnings from global markets and bringing them back home.

Asked by Rach when the hotel industry will follow the example set by airlines—“Come fly with us, but pay what we want you to pay”—panelists agreed that RevPAR growth in 2011 would be driven largely by increases in room rates. Helping spur that growth will be a relatively small supply of new hotels coming on line, notwithstanding active development in China and a handful of other markets. A chart presented during a later panel by Smith Travel Research’s Mark Lommano drove the point home: there are more than 180,000 rooms being built in Asia, nearly three times as many as are under development in North America. In former years, North American markets would have led the way, said STR CEO Lommano.

In opening remarks Monday morning, conference chair Jonathan Tisch, CEO of Loews Hotels, called upon the lodging industry to unite behind a common problem: the inadequacy of infrastructure to meet travel demands. “It’s time we understood that the challenge of building world-class infrastructure to match the world-class destinations extends way beyond any single stakeholder,” Tisch said.