Despite high inflation and a weakening economic environment, the hotel industry is not experiencing a slowdown.
As Hilton CEO Chris Nassetta predicted, this summer would be the “biggest in our 103-year history,” it is actually the opposite. “
One of the most affected industries was travel. The Covid-19 pandemic ravaged only the travel industry. It was the only industry that suffered as much from the Covid-19 pandemic.
This decision was costly due to the high demand and inflationary pressures. The hotel operators believe there is still potential for price increases.
Nassetta said that the price of everything has risen so that we are no different from when we go to a grocery store, gas station, or other aspects of our lives. It’s all discretionary. “
According Nassetta, there were two main factors driving high demand. The $2.5 trillion leisure consumer has saved and the strong corporate balance sheets of companies that have “very great” profitability.
He stated that the couple had been away for two years, from both a business and leisure perspective. They also attended events and meetings. They are unable to do what they want to.
Tony Capuano is the CEO of Marriott. He stated that Marriott’s revenue per available room, which measures hotel performance, increased by 25% over Memorial Day Weekend 2022. This contrasts with 2019. The Marriott luxury portfolio also includes hotels like JW Marriott and Ritz Carlton. These hotels experienced a 30% increase in rates in the first quarter of 2022 compared with 2019.
Capuano said that as long as service can be delivered, which can prove difficult in labor-intensive areas, remarkable pricing will continue. Capuano spoke Monday at the “Closing Bell “. He stated that he believes as long as service is delivered, which can be difficult in labor-intensive markets, there will continue to be remarkable pricing.
The Covid-19 testing requirements for international air travel have been dropped by the Biden administration. This could provide another boost in demand.
While other countries like the United Kingdom and Greece have eased their requirements over the years, the U.S. still required all travelers to show proof of a negative Covid-19 screening at the least one day before they could board an American-bound plane.
The restriction was being imposed by the travel industry. Capuano claimed that travelers would choose a destination that has less friction if they were to avoid pre-departure testing.
Roger Dow, the president and CEO at the U.S. Travel Association said that the Biden administration deserves to be praised for this move. He stated that this would welcome back travelers from around the globe and accelerate the recovery of the U.S. tourist industry.
Mark Hoplamazian is Hyatt’s CEO/President. He stated that foreign tourists visit the U.S. more often than domestic visitors and that testing requirements “creating friction.” “
Hoplamazian said that there aren’t many travelers who will delay their travels because of this requirement. “
Keith Barr is the CEO of IHG Hotels & Resorts. The company owns brands like Holiday Inn and InterContinental. He stated that he expected the demand for IHG Hotels & Resorts will continue to grow given normalization of travel after the pandemic.
Further price rises are likely as inflation and other costs continue rising.
Barr stated that the demand is so strong, “we’re being priceable, but in reality we haven’t even been keeping pace with inflation,” Tuesday’s “Closing Bell”. “
The industry will have very limited new capacity, which will cause prices to rise.