• Mon. Apr 22nd, 2024

US Hotels Still Have Room To Recover Demand From International Travelers

Bynewsmagzines

Jun 13, 2023
Hyatt Hotels Corp. CEO Mark Hoplamazian (left) and Hilton CEO Chris Nassetta discuss the role international travelers are playing in U.S. hotel industry recovery today. (Bryan Wroten)

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NEW YORK — International travel finally is playing a significant role in global hotel industry recovery, and CEOs say it’s just the beginning.

Whether they’re considering trends in international demand for U.S. travel, effects of U.S. travelers heading out of the country on vacation or shifting patterns of where and how people are traveling around the world, CEOs speaking at the NYU International Hospitality Industry Investment Conference said the long-term effects of international travel are just now unfolding.

“Europe’s on fire, finally,” said Hyatt Hotels Corp. CEO Mark Hoplamazian. “Business travel in Europe is tracking ahead of 2019 levels, and it’s the only region of ours that’s tracking ahead in business-transient travel. Group is coming back with some lag, and leisure has just been off the charts.”

Analytics companies are predicting a record summer of leisure travel demand for Europe this year. Leslie Hale, president and CEO of real estate investment trust RLJ Lodging Trust, said she definitely recognizes that “U.S. customers have pent-up demand to travel internationally.” The end result of the U.S. Federal Reserve’s strategy to temper inflation may have some effect on the ability to travel internationally, but the demand definitely is there, she said.

But the effects of foreign travelers vacationing in the U.S. this summer are a bit mixed.

“Certain markets like Miami and New York that are reliant on foreign inbound travel recover a lot faster,” said Sloan Dean, CEO and president of Remington Hotels.

Margaritaville Holdings CEO John Cohlan said “the international traveler certainly is back in New York, and here in Times Square,” where the company opened the Margaritaville Resort Times Square in 2021.

Hawaiian destinations are another typical bellwether of U.S. leisure travel demand.

Jeff Wagoner, president and CEO of Outrigger Hospitality Group, which owns and operates resorts in Hawaii, Thailand, Fiji, Mauritius and the Maldives, said airlift from the mainland U.S. to Hawaii has increased significantly over 2019 levels, which has offset the typically high numbers of Japanese travelers to the islands.

“Southwest has new destinations coming into Hawaii, United and Hawaiian Airlines have new destinations in,” he said. “We’re at about 135% of airlift coming in from the U.S. mainland versus 2019. We’re at about 40% of 2019 levels when we look at Japanese travelers coming in, so nowhere near where we could be. Those travelers have higher retail and [food-and-beverage] spend, too, so we really haven’t hit the balance point of how the future will look.”

To that point, Asian outbound travel remains a wild card. Dean added that while East Coast cities are feeling positive effects of inbound foreign travelers, “others, like Seattle and San Francisco suffer because of the lack of Asian inbound.”

Hilton CEO and President Chris Nassetta acknowledged that China is “about a year behind the U.S.,” and not only are fewer outbound Chinese travelers headed to the U.S., fewer U.S. business travelers are going to China.

Still, he said he is optimistic. For one, China’s domestic travel performance has been solid.

“It’s eclipsed 2019 levels in all forms of business, leisure, meetings and events travel,” Nassetta said. “Outbound China is coming in the second half of this year. You can start to see flights loading in. China was the largest outbound market pre-COVID, and I have every confidence it will be the largest outbound market again.”

The short-term impact of slower traction from Chinese travelers isn’t limited to the U.S., Wagoner said. Traditionally, Thailand’s largest feeder markets were Russia and China. While Russian travelers are back, Chinese travelers have not returned in force.

But at the same time, he said India is growing as a feeder market to the Maldives, and the CEOs on the panel acknowledged that effect elsewhere.

“When you think about the power of the outbound Chinese traveler, India’s going through that same evolution,” said IHG Hotels & Resorts President and CEO Keith Barr.

Wagoner summed up the trajectory of international travel: “The dynamics are moving; they may be permanent and some may be temporary,” he said. “We have to continue to keep our eyes wide open to all these demand sectors. We’re still in a flux that will probably stabilize in the next year or so.”
 
Editor’s note: Chris Nassetta serves on the board of directors for Hotel News Now’s parent company, CoStar Group.

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