Despite high inflation, softening and fears of recession, the hotel industry has not slowed.
It’s the exact opposite, Hilton CEO Chris Nassetta predicts that the hotel chain will be “the biggest summer we’ve ever seen in 103 years of history this summer.”
Few industries have been hit as hard as travel by the Covid-19 pandemic, and almost all leisure and business travel plans have been curtailed. However, as vaccination rates and relaxed restrictions spread across the country, travelers are back. May, World Leisure and Business Flights Break through the 2019 level For the first time since the pandemic began.
However, while it was accompanied by costs caused by both high levels of demand from fellow travelers and other inflationary pressures, hotel operators still believe there is room for further price increases.
“All prices have gone up, so it’s no different than going to a petrol pump, a grocery store, or any other aspect of life,” Nassetta told CNBC’s Squawk on the Street on Monday. That’s discretion. “. ..
Nassetta said two things keep demand high. It’s a strong corporate balance sheet, coupled with an incremental savings of over $ 2.5 trillion for leisure consumers and “very good” profitability.
“They spent two years at meetings and events, both in terms of leisure and business, but couldn’t do what they needed,” he said. “They have the availability of discretionary income in both segments to do that, and they have a need, which is in line with demand.”
Marriott CEO Tony Capuano said the company’s revenue per available room, which measures hotel performance over Memorial Day weekends, increased by about 25% in 2022 compared to 2019. A luxurious portfolio of Marriott including hotels such as JW Marriott, Ritz-Carlton and Cent. Regis, these hotels saw prices increase by nearly 30% in the first quarter of 2022 compared to 2019.
“I think we continue to set really amazing pricing as long as we offer services that can challenge difficult markets,” Capuano said in a “Closing Bell” Monday. He said that places like leisure and coastal destinations had “very strong rate potential”, but “in the middle of the country, some urban markets didn’t come back so quickly.” rice field.
Another possible boost to demand could come, as the Biden administration has. Dropped now Covid-19 test requirements for air travelers from abroad.
Other countries, such as the United Kingdom and Greece, have long lifted the requirement, but in the United States, travelers are tested negative for Covid-19 the day before boarding a flight to the United States, regardless of vaccination status. I was asking you to show proof of something. It was still one of the last countries to enforce such a rule.
Travel industry executives argued that this restriction was hurting international travel demand. “The need for pre-departure testing creates uncertainty for travelers. This is another hurdle for choosing a destination with less friction,” Capuano said in a statement to CNBC’s SeemaMody. I am saying.
“The Biden administration welcomes visitors from all over the world and praises this action to accelerate the recovery of the US travel industry,” Roger Dow, chairman of the American Travel Association, said in a statement. “International inbound travel is very important for businesses and workers across the country who are struggling to recoup their losses from this valuable sector.”
Hyatt President and CEO Mark Hoplamazian said on Tuesday’s Squawk on the Street that foreign travelers to the United States spend far more than domestic travelers, and the test requirements are “ It creates friction. “
However, demand remains high even if no traveler may have put the trip on hold due to requirements. “Almost entirely, all business segments and leisure are on fire in every cylinder,” said Hopla Magian.
Keith Bar, CEO IHG Hotels & Resorts Owning brands such as InterContinental and Holiday Inn, he said he expects demand to continue to grow for the rest of the year as post-pandemic travel is more normal.
Prices may rise further as inflation and other costs are taken into account.
“Demand is very strong … we have the ability to set prices, but we’re not really keeping up with inflation,” Barr said in a “Closing Bell” on Tuesday. “This business will continue to be price-determining and demand will continue during the summer,” he said.
“These prices are likely to rise as little new capacity is added to the industry,” said Nassetta. “The laws of supply and demand, the laws of economy, are alive and well.”