Concerns Include New COVID-19 Variant, Economy
The past year was mostly positive for the hotel industry, as hotels in many markets achieved record-high rates and revenue per available room near or better than pre-pandemic levels. But staffing woes, supply-chain disruptions and the persistent threat of a recession were also at the forefront of the industry in 2022.
At a time of reflection and anticipation, hoteliers across several positions shared what they are most optimistic and pessimistic about as a new year gets underway.
What Are You Most Optimistic About in the Hotel Industry in 2023?
John Beck, general manager, Crowne Plaza HY36 in New York City: “New York is back. Private businesses are putting money into the New York experience, and when I say that I talk about all these real estate developments — we have Hudson Yards, Manhattan West. Companies are putting money behind the New York experience and doing things that have never been done before.
“Manhattan West has an ice skating rink now, so there’s now a few ice skating rinks in New York City. All the private funds going into the destination is exciting, and it gives more people access to do fun things in New York. It’s not just Rockefeller Center. The things that are planned for next year: festivals on Governors Island, festivals on Roosevelt Island, which hasn’t been done before.
“New York is really an accessible destination, and all the things that typically weren’t happening before the pandemic that are happening make it accessible.”
Vickie Callahan, senior vice president of revenue generation, Peachtree Hospitality Management: “I am most optimistic about the continued recovery of occupancy with limited new supply coming into the markets. This means the additional demand will continue to benefit the existing supply in the markets and help further recover occupancy in markets still trailing historical highs.”
Lynette Eastman, general manager, Surfjack Hotel & Swim Club in Honolulu, Hawaii: “The most optimistic thing is we have done a survey. Quinn [the Surfjack’s PR firm] wanted a survey of all their rivals to find out how they found out about the hotel. And the wonderful thing: No. 1 is word of mouth by a landslide for the Surfjack. No. 2 is Google. That’s attributed to Quinn and their marketing abilities to get us out there. And No. 3 is our website. So social media came in further down, but significantly different from the top three, for how they heard about the Surfjack. And so if it’s word of mouth, how awesome is that?
“Even with all this uncertainty, I as a hotelier am very excited about 2023. I’m not expecting a banner year, I’m not expecting it to blow up, but I am expecting it to continue, at least the way we came through in 2022, and not some huge drop.”
Amanda Hawkins-Vogel, executive vice president of operations, Twenty Four Seven Hotels: “Staffing. After a busy 2022, we have the staffing challenges now under control and with more unique solutions in place. We feel confident about being able to offer our guests outstanding service each stay.
“Like all hotel companies, one of the biggest hurdles was staffing our housekeeping departments. More creative ideas such as job sharing — part time, flex time and any time actually — that you can [make] work, we will schedule around the associate.
“We’ve also made sure we have all the tools at hand for our teams heading into the new year. For example, capital investment for new equipment and increasing linen par’s will help with productivity and efficiency, thus making our teams jobs easier.”
Akki Patel, President and CEO, LRE & Companies: “Opportunities! We are well-capitalized, so we are excited about the opportunity to look at more real estate. Also, we hope sellers will be more realistic with their timing expectations and give us enough time to determine whether the deal is feasible.
“During this last bull cycle, it has been a mad dash trying to perform due diligence and run our pro formas in very short timing windows. We are also excited because we will be coming to market with new projects; they should be better-positioned to capture market share since we will be the newer rooms and projects.”
Grey Raines, Managing Partner, Raines Company: “I am excited about our continued growth and what that means for our company and, most importantly, our team members. We are positioning ourselves as a critical player in the Southeast and, in preparation to do so, have introduced new leadership roles, inner-company promotions, and restructuring of roles and responsibilities within our corporate organization.
“These changes will provide further advancement opportunities for our team members while setting the company up for continued success.”
What Are You Most Pessimistic About in the Hotel Industry in 2023?
Beck: “I think as we head into the holiday season, we saw it last year. This time last year, we were sitting really well as an industry and we were poised to have a great December and an amazing [first quarter]. And then we had a variant hit and COVID kind of happened again.
“I think that’s on everybody’s mind. The industry is getting stronger. The biggest thing that can really hurt our industry is … another variant and COVID starting to explode again.
“I’m not an expert, I don’t think we’ll see that, but this month [December 2022] is going to be a record month for our properties. This month is going to be the best month financially we’ve ever done and hopefully nothing affects that.”
Callahan: “I am most pessimistic about the return of corporate demand although optimistic that hotels will see increases in ADR for corporate travel after three years of equal or lower rate performance in corporate travel. It has steadily improved in the last 12 months, however, still have a way to go for midweek occupancy levels to return.”
Hawkins-Vogel: “Continuing concern around the economy and inflation. Adding to that, the uncertainty of the return of the corporate traveler. To this end, we are very mindful of keeping a tight rein on expenses and will be monitoring closely the changing market and economic conditions.”
Patel: “Naturally, we are cautious and more conservative in our forward-looking ADRs and occupancy rate projections. Interest rates might stay up longer than more of the developers are expecting.”
Raines: “The rise in interest rates will continue to be a headwind in 2023 for new development and existing assets. As interest rates climb and debt becomes more difficult to obtain, development will slow down, only allowing exceptional projects to be built, which we view to be positive. Additionally, we may see a wave of distressed pricing that, when positioned correctly, will create greater acquisition opportunities.”
