HDC Day Two: Diving into downturn prep
 
HDC Day Two: Diving into downturn prep
16 AUGUST 2019 2:25 PM

Editors recap the second day of the Hotel Data Conference with takeaways, quotables and more highlights from the event.

NASHVILLE, Tennessee—The second day of the Hotel Data Conference concluded a two-day event filled with revised performance outlooks and discussions of portfolio and cost-control strategies as the hotel industry approaches a downturn.

Here are some highlights from Day Two of the event.

Day Two recap video

Photo of the day

During the closing session of the 2019 Hotel Data Conference, panelists discussed the hotel industry’s challenges and successes with distribution channels. From left: Patrick Mayock, STR; Alex Dragan, Four Seasons Hotels and Resorts; Kerry Mack, Highgate Hotels; Philippe Garnier, InterContinental Hotels Group; and Michelle Fiorletti, LodgeWorks. (Photo: Bryan Wroten)

Quote of the day
“Be a profit-hunter—understand the profitability of the channels. And try to own the guest journey.”
--Alex Dragan, director of global analytics, Four Seasons Hotels and Resorts, on the “Are hotels finally winning the distribution battle?” as parting advice for attendees.

Tweet of the day

Slide of the day


During Friday morning’s “Megatrends impacting the global hotel industry” panel on Day Two of the Hotel Data Conference, STR’s Robin Rossmann explained the factors affecting the hotels broken down by global regions. This particular slide shows that Europe and the U.S. have followed similar cycles with ADR and occupancy between January 2007 and June 2019.

Data point of the day
According to additional data presented by Rossmann during the Friday morning general session, supply in the Asia/Pacific region is at 3.6% for 2019 while demand is at 2.7%, signaling a general slowdown in performance.

Editors’ takeaways

The Hotel Data Conference is the perfect intersection of data covering all aspects of the industry, and it’s been most interesting on Friday to hear how data really underpins so many decisions made at both the corporate and property levels. STR’s Robin Rossmann talked about the many ways macroeconomic issues, political issues and currency values are having an impact on travel in various world regions—all trends we can see echoed in various ways here in the United States. Speakers on the opening general session panel, “How guest experience pays off,” talked about how they gather and use so much data behind the scenes to power all experiences they’re delivering to guests. Those speakers—Chris Wilroy from Hilton, Chris Green from Chesapeake Hospitality and Robert McDowell from Choice Hotels International—talked about the next wave of further personalizing guest experiences in travel, and how data will be what gets the industry there.
--Stephanie Ricca, editorial director
@HNN_Steph

Revenue per available room still is expected to be above the zero mark, actually just below the +2% mark, for full-year 2019, even though it is currently less than that in year-to-date terms, and I heard a few mutterings on Day Two of the Hotel Data Conference as to how exactly that will be achieved. Raise average daily rate? Of course, that old chestnut, but with supply still coming in, although not at supersonic levels, guests will have more choices where to stay. The other strategy is to cut costs, and this is where I loudly heard the advice of hoteliers here the last time around, that is, before and during the Great Recession.

Vince Barrett, VP of food and beverage and rooms at New Castle Hotels & Resorts, said last time around, in 2008 and 2009, the strategy was to cut costs to the bone. “Actually, we broke into the bone,” he said, and thus lies a warning. Do not scrape away at quality and do not have staff double or triple up their responsibilities, as both will come with the risk or certainty of destroying satisfaction, demand and service.

There also was talk at lunch that there will be renewed focus on additional revenue streams, including the dreaded resort fee. Coastal markets might feel the need to have resort fees help the top line, but there are also options in F&B, parking, golf and other amenities. Clever thinking is needed, as is the requirement to not panic.
--Terence Baker, senior reporter, Europe
@terencebakerhnn

Developers are always going to develop, and as the industry faces supply concerns as supply and demand growth are nearly at an equilibrium, that calls for making sure everything about a new project is rock-solid. Doubly so when taking into account recent warning signs are indicating a downturn might be headed our way.

During the “Development pipeline: How much is real, how much is air?” breakout session today, STR VP of Operations Bobby Bowers and Gerry Chase, president and CEO of Chase Hospitality Advisors, spoke about the hotel development pipeline and the factors that come into play in whether a hotel is built, delayed or dropped. The first step is looking at the numbers to see if a location within a market makes sense, but there’s extra work necessary even when the numbers are good—you might be headed into an area about to be flooded with more supply because other developers saw the same numbers.

Any number of things can throw off a hotel’s construction and/or opening: site selection, financing, city approval, etc. Even when everything makes it through, by the time a developer is ready to build, construction costs could easily have increased, sometimes to the point of requiring the developer to rebid the work. At least for the time being, construction costs are not going to go down.

We’re edging closer to the end of the cycle, so developers, pick your projects even more carefully than you have before.
--Bryan Wroten, senior reporter
@HNN_Bryan

As the hotel industry inches closer to some type of downturn, hoteliers are looking to stay nimble and make strategic deals to manicure their portfolios. STR, Tourism Economics and CBRE all revised their 2019 and 2020 full-year outlooks down, and that’s understandable based on the performance of the U.S. top 25 markets, which act as the bellwether of the industry’s health. Year to date through June, while total U.S. RevPAR has increased 1.2%, in the top 25 markets RevPAR is down slightly 0.3%.

But markets outside the U.S. top 25 markets are a bit healthier, showing 2.3% RevPAR growth through June. In the “Beyond the Top 25” data dive session, STR’s Blake Reiter and Winston Hotels’ Mathew Jalazo provided some examples—Daytona Beach, Florida, and Charlotte, North Carolina—that are poised for growth and have already shown some resiliency as the total U.S. numbers have softened. How will hotel developers and investors react as the top 25 markets become oversupplied? My bet is those types of secondary and tertiary markets are firmly on their radar as targets for investments that will provide a bit of a buffer when a downturn inevitably arrives.
--Dan Kubacki, production editor
@HNN_Dan

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