Hotel CEOs See Big Improvement in 2021

In 2021, “we will be up massively over 2020,” said Arne Sorenson, CEO of Marriott International, speaking on a panel of CEOs at the online NYU International Hospitality Industry Investment Conference.

While hospitality industry leaders agreed that it would be a long time until full recovery, they saw next year as providing a vast improvement over the current one.

Sorenson said that by the second or third quarter of 2021, there will be “an increasing sense that Covid is getting behind us,” and as that happens there will be a step up in travel – “not instant but pretty quick.”
After that, he said, the industry will be able to see how seriously harmed the underlying economy was as demand for travel will depend on the economy. Sorenson said that groups will take longer to come back but, he added, “by the end of 2021, I’m optimistic that a lot of this will be behind us and we will be moving toward recovery. Although we may have an economic crisis rather than a health crisis, we know how to rebuild from that.”

Chris Nassetta, CEO of Hilton, said 2021 will be the biggest growth year for RevPAR (revenue per available room) in the company’s history. He said Asia is improving and Japan and the U.S. are relatively stable while Europe “seems to be going backward.”

He said performance will be “choppy to stable” until spring. “When the tulips come up on the East Coast,” he said, “we will be in a very different place.” Nassetta said that corporate travel will get back to the level of demand of recent years as companies realize that “not traveling for business is fine until your competitor does it.”

And Mark Hoplamazian, CEO of Hyatt, agreed, saying 2021 will be “a magnificent inflection point and will provide a tremendous level of hope.” As part of that growth, he said, “wellness will be big, and the mental mindset will be very different. “

Finally, David Kong, CEO of BWH Hotel Group (Best Western), said he sees 2021 as being up 45% against this year despite the fact that the first couple of months of 2020 set records.

The executives also discussed the impact of the U.S. elections, all agreeing that a massive stimulus bill was still necessary to save many of their hotels – most of which are franchised and are actually small businesses. The global brands, said Keith Barr, CEO of InterContinental Hotels Group, are “asset-light” and will be fine. Sorenson said that “a liquidity crisis is turning into a solvency crisis.” He said an extension of the PPP (Paycheck Protection Program) program would allow people to come back to work.

“We are very disappointed about the lack of a stimulus,” said Nassetta, adding that the election “put us in a position where it is politically possible.” He said a divided government is probably a good thing because “it will require compromise.”

The panelists lamented the failure of the Main Street Lending Program which was supposed to provide loans for small and medium-sized businesses but which has gone largely unused. Hoplamazian recommended that those funds be reallocated to PPP. And Kong said that “the industry will only survive through government help.”

Two panelists from Europe provided their perspectives. Barr said the renewed lockdown in the U.K. presents “a real challenge” and that “we need to continue to speak to governments about the importance of our industry.” He said hospitality was not in structural decline before the pandemic and that governments simply need to “bridge” the industry through the pandemic. If not, he said the impact will be significant with hotels closing and all the indirect vendors being hurt.

Barr also said that with the probability of a new administration, “we will again see a strong connection between Europe and the rest of the world.” With the U.S. able to take a leadership role, that will help with economic stimulation. A lack of government support, said Barr, will also disproportionately affect women, youth and minorities.

Sébastien Bazin, CEO of Accor, said that 12% of Europeans work in travel and tourism and almost all of those businesses have fewer than six employees. Referring to the global hotel brands, he said, “We need to be the big brother to make sure there is stimulus for the little guys next to us. The relationship between the big guys and small guys has never been more important to the industry.”

Bazin said that strategies among European countries have been “incoherent.” He said, “It’s a mess and will be until the 27 countries get together at the government level.”

Looking ahead, Nassetta said that while it’s easy to think the world has changed, “it will change a lot less than we think.” He said, “we won’t be doing Zoom calls the rest of our lives.” At some point, he said, COVID-19 “will be like the flu.”

And Bazin said, “We are in a blessed injury and this situation gives us time to rethink about who we are.” He said the hospitality industry “has everything at its fingertips and at some point COVID-19 and lockdowns will be behind us and we will just look forward to what comes after.”