If you live in the United States and you’re like me, you’re alternately puzzled, enraged and amused by the shenanigans underway in Washington, D.C. If you’re not an American, you’re probably mostly amused at the idea that politicians in a country such as the U.S. could allow the wheels of government to grind to a halt.
But instead of railing about the dunderheads in Congress and how the government shutdown is deleterious to the hotel industry, I’m choosing to focus on the positive. While this may seem to be a case of Nero fiddling while Rome is burning, here are five encouraging long-term trends affecting the hotel industry:
Travel as a birthright. Many years ago, hotel marketing guru Peter Yesawich, who is vice chairman of MMGY Global, introduced the idea of travel as a birthright, or the notion that Americans in all economic classes will make many sacrifices in their lives but a yearly vacation or even a weekend getaway isn’t one of them.
Even during the last recession, leisure travel was down but not nearly as much as business and group travel. While group business has been slow to materialize as the world climbs out of hard times, transient hotel business, both business and leisure oriented, has been stellar.
Last week, TravelClick released data that forecasts healthy increases in transient hotel business, especially leisure business, during the next 12 months. According to TravelClick, transient bookings for the 12 months are up 6.1% with rates showing a 3.6% gain. Occupancy from leisure business is up 6.6% with rates up 3.8%.
Even in such a period of political and economic uncertainty, consumers have a yearning to travel, and they’re acting on it.
Coming to America. The idea that travel is a crucial part of life isn’t solely an American phenomenon. During a recent interview, Vijay Dandapani, president and COO of Apple Core Hotels, told me despite the ongoing economic uneasiness in the eurozone, Europeans—even those in the middle class—are still traveling, and many of them are coming to America and to his five moderately priced New York hotels.
As he put it succinctly, “Someone told me the French would rather go to their graves than give up their holidays.” That’s a little extreme, but it shows the level of commitment to travel by people across the globe.
Travel has been a bright spot in an otherwise dismal balance of trade for the U.S. According to the U.S. Travel Association, through the first seven months of 2013, travel exports accounted for nearly one-third of the overall increase in U.S. exports this year. In the first seven months, travel exports increased 8.9%, or six times faster than the 1.5% rise in other U.S. exports.
Washington likes us. Rising travel exports to the U.S. are a combination of a yearning of many people around the world to come to this country and a U.S. government that is finally embracing the power of travel, both as an economic engine and as a contributor to great understanding among people.
Through the hard work of industry groups such as the American Hotel & Lodging Association and the USTA, Congress and the administration of President Barack Obama are finally taking positive steps to make it easier to welcome global visitors.
The visa process, a long-time thorn to the travel industry, is gradually being fixed, meaning visitors from China, Brazil and elsewhere only need to wait days instead of months to get documents necessary to enter the U.S. Another plus was the appointment of Commerce Secretary Penny Pritzker, a shrewd businesswoman with a strong pedigree in the hotel industry. She knows the value of travel and should be a strong ally in Washington for the industry.
More needs to be done, however. Although Congress failed to enact comprehensive immigration reform this year, travel industry lobbyists are pushing legislators to pass the so-called JOLT Act, a bill that includes many of the travel-friendly provisions that were included in the failed immigration reform package.
A pool of liquidity. Money is again flowing in the hotel industry for acquisitions, renovations and even new development. That news can be a double-edged sword because in previous hotel industry cycles overbuilding typically led to industry downturns.
While there are signs of restraint from lenders and those seeking financing, it’s clear a lot of capital is chasing a lot of potential hotel deals. During a discussion last month in Phoenix at the 19th annual Lodging Conference, one panelist demonstrated how the trajectory of available money is shooting upward.
Bill Grice, executive VP of Jones Lang LaSalle, talked about a major hotel construction project on which his firm is acting as a financing intermediary. He said while as recently as 12 months ago the project would have had difficulty finding any financing, it recently drew term sheets from nine lenders, each offering financing of up to 80% of the cost of the hotel.
That scenario is being replayed throughout the industry on hundreds of deals for hotels large and small, branded and unbranded and in major markets and rural interstate locations.
We are hospitality. The biggest asset of the hotel business is one that isn’t matched by any other sector of the tourism industry: its ability to shower guests with comfort, joy, friendliness, safety and hospitality.
People love to stay at hotels because they’re refuges from the work-a-day world and offer customers a promise of luxury, indulgence, relaxation and maybe even romance.
Email Ed Watkins or find him on Twitter.
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