Industry view point

Citation

McInerney, J. (2010), "Industry view point", Journal of Hospitality and Tourism Technology, Vol. 1 No. 2. https://doi.org/10.1108/jhtt.2010.43301baa.002

Industry view point

Article Type: Industry view point From: Journal of Hospitality and Tourism Technology, Volume 1, Issue 2

The hospitality industry, despite recent challenges, remains one of the strongest and most interesting businesses in the world. In this paper, I plan to focus on the state of the travel and tourism industry – where it is, where it is headed and some of the issues that face all of us domestically and internationally.

A little over a 100 years ago, on January 31, 1910, 60 hotel owners and operators formed the American Hotel Protective Association, at the Palmer House in Chicago, led by President Sam Dutton. Its purpose was protection against deadbeats, check forgers, dishonest, and undesirable employees, and crooks of all descriptions.

The associations name and the purpose over the last 100 years has changed, but the mission to serve our members has not. The American Hotel and Lodging Association (AH&LA) is the sole national organization in the USA, representing all sectors and stakeholders in the lodging industry. Headquartered in Washington, DC, AH&LA provides our members with national advocacy, public relations, image management, education, research, information, and other value-added services to provide bottom line savings and ensure a positive business climate for our industry. And partner state associations provide additional benefits at the local and state level.

American Hotel and Lodging Foundation will fund 1.2 million dollars in domestic academic scholarships, research grants, school-to-career and workforce development programs in 2010. American Hotel and Lodging Educational Institute provides training DVDs, videos, distance learning programs, and certification for the industry, while serving as a major source of curriculum and textbooks around the world.

At January 2010 Americans Lodging Investment Summit (ALIS), the mood of the speakers and the 2,200 attendees was much better then everyone anticipated. People were cautiously optimistic. They believe 2010 will be a transition year; the US hotel industry is projected to end this year with decreases in two of the three key performance measurements, according to STR’s monthly forecast update.

STR projects 2010 occupancy to be flat at 55.1 percent, ADR to decrease 3.2 percent to US$94.39, and REVPAR dropped 3.2 percent to US$51.99. The drop in average rate and REVPAR is caused by the major corporations negotiating their rates for 2010 in October and November of 2009.

Supply growth and demand growth during 2010 in the USA are both expected to increase 1.8 percent. The major growth in the USA will be in New York with 46 properties 12 in Brooklyn alone, Houston with 30, other cities with new hotels are Atlanta, Chicago, Dallas, Los Angeles, Miami, and Washington, DC. Hotel companies will continue to grow, but 60-70 percent of their expansion will be internationally.

With development stagnant in the USA due to the continued credit freeze, Marriott International has turned to its new Autograph Collection as a vehicle for growth. The company announced Richard Kessler’s seven hotels as the first to join the new upscale collection in January, and plan to have 30-50 in North America by 2011.

Ed Fuller, Marriott’s President and Managing Director for International Lodging, said the company plans to double, or possibly triple its growth in the Caribbean during the next five years through growth of its Courtyard brand. InterContinental Hotels, president of the Americas, Jim Abrahamson said the company also is planning to double its growth during the next five years in the Caribbean market. IHG currently has ten hotels and about 2,500 guestrooms in the region.

Sheraton is seeing demand and growth opportunities for new hotels in fast-growing international markets like China and India. In addition, as transaction activity increases in more mature markets throughout North America and Europe, Starwood expect to see a number of high-quality conversion opportunities to be realized, especially in light of the successful completion of the brand’s global revitalization.

Panelists at ALIS felt that the high-end business travelers will drive the shape of recovery almost certainly as there has been substantial recovery in that end of the market during the last couple of months. This is basically what happened in the last economic down turn. Luxury properties were the first to lose occupancy and they were the fastest segment to lead the recovery.

The outlook indicates that the industry’s performance will turn positive in 2011. STR projects increases in all three key performance metrics during 2011: occupancy is projected to increase 2.2-56.3 percent; ADR is forecasted to rise 2.0 to US$96.28; and RevPAR is expected to grow 4.2 percent to US$54.18. Supply in 2011 is projected to grow close to 1.0 percent and demand is expected to increase 3.2 percent.

There are more than 49,000 lodging properties in the USA, with nearly 4.7 million rooms with $140.6 billion in sales. The industry employs approximately 1.8 million workers at properties alone and directly supports more than 7.5 million jobs. Employment directly generated by travel has grown nearly 30 percent in the last ten years – which is almost one-and-a-half times as fast as most other industries. While last year may not have been a banner year in terms of hiring, our employment growth is expected to continue. And the hotel industry will in the USA alone need 300,000 additional employees by 2014. This year the US Travel Association forecasts the US travel industry will add 90,000 American jobs.

Tourism is one of the major industries for many countries, attracting foreign exchange, and stimulating economic development in industries from hospitality to construction, property development, transportation, and retail. In the USA, the tourism industry is currently the third largest retail industry, one of America’s largest employers and the nation’s largest services export industry. Combined direct and indirect expenditures and we’re talking about a $1.3 trillion industry in the USA alone. That is equivalent to more than half of the federal budget, and it means we are generating $116 billion in tax revenue each year. So, good news for our industry is good news for our nation’s economy.

America continues to be a bargain for international travelers. Closer to home, Americans are more likely to vacation in the USA as they get more for their money. Even rising gas prices last summer did not have a major significant impact on travel, as many Americans have subscribed to the belief a vacation is their RIGHT, not a LUXURY.

And as the economy rebounds, the hotel industry is gearing up for a significant influx of new international travelers from emerging markets. By 2015, 400 million Chinese and Indians will have sufficient incomes to travel abroad – for perspective that is seven times the number of international travelers who visited the USA last year.

The American travel industry was facing troublesome times in 2001 before 9/11, which extended well into 2002. But then, we experienced a five-year upswing during which we saw record hotel starts, record occupancies, record increase in average rates and record profits. This economic down turn will pass and when it does, we will be a stronger industry with a brighter future.

The thing about the hospitality industry is that it allows you to enter a world where anything is possible. One day you could be working in Manhattan and the next day you could be working in Madras or Madrid. That is because the hospitality industry is an international industry […] and the things you learn and the work you do crosses borders.

It also crosses disciplines. Some of the hospitality students may be fortunate enough to know exactly what you want to do for the rest of your life right here and right now. But I would bet that 90 percent of you are not so sure. Or maybe you think you are sure but let me tell you from experience […] what you think you are sure of at the age of 21 or 25 is not always so black and white by the time you reach 35… or 45… or even 55.

The beauty of the hospitality industry is that you can start out as a chef and become a general manager. You can start out as a security guard and become a CEO. You can even start out as a waiter or waitress and become the owner of a hotel chain. It happens often in our industry, and it can happen to you.

In all, there are more than 200 different types of positions in the lodging industry from which to choose. And not only is there a range of jobs, there is a wide range of places to work.

On the other hand, travel and tourism or the hospitality industry – whatever you call it – is not just hotels. It is tour operators, destination management, convention centers, national travel organizations, governments, trade associations, airlines lines, cruise lines, time share, and restaurants, just to name a few. So open your eyes and focus on the tourism opportunities that are out there around the world today.

The travel and tourism is growing everywhere. Worldwide it is responsible for generating one in every 12 jobs, which are 238 million jobs. That is about 8.4 percent of total global employment. The job figures will rise to nearly 300 million in just ten years. That is why, for the foreseeable future, demand for well-educated and trained staff in travel and tourism will exceed the available supply. There are just not enough education and training programs of sufficient quality to meet the industry’s rapidly growing demands.

The diversity in this industry means there is something for every personality, every talent and every skill set. As hospitality students and future leaders, the skills that you learn along the way are interchangeable and transferable from segment to segment.

The structure of the hotel industry has changed significantly in the last decade as the US based international chains are now launching their many segments around the world. The European, Asian, and Middle Eastern chains are spreading their wings as the world has become truly a global village.

When I started my career […] Sheraton was Sheraton, Howard Johnson was Howard Johnson, and Holiday Inns was Holiday Inns and Marriott had only one hotel. Now Sheraton is part of Starwood along with St Regis, Four Points, Westin, ALOFT, Element, and the W brand. Howard Johnsons is just one of Wyndham’s many brands. Meanwhile, InterContinental is the parent company of Holiday Inns along with Holiday Inn Express, InterContinental, Crowne Plaza, and Staybridge Suites. Marriott has 17 brands or initiatives.

This consolidation of multiple brands under one corporate banner is a fact of life that will continue. What this means is, as an associate of one of these parent companies, you cannot only move up within one hotel or move to another hotel brand within the same family. There is another unique thing about the hospitality industry – instead of being pigeon-holed throughout your career in one area, there is opportunity to jump career categories while staying in the same industry and even within the same company.

Some of the fastest growing career tracks in our industry are spa management, event planning, revenue management, and information technology. To be competitive in today’s business climate all major hotels or boutiques need to have a full blown spa or at least a day spa. Event planning is a two-headed coin, the hotels have them and so do companies, associations, and the government have them.

Revenue management is the key to efficient and effective yield management and in many cases the key to a fast track career. And technology is offering all sorts of new career opportunities. That is because travel is at the top when it comes to online transactions.

All of the 2.0 marketing initiatives are providing new methods of reaching the consumer whether it is face book, blogs, twitters, etc. We are now undergoing a major change in which media and connectivity solutions are more increasingly important to hoteliers and their guests. The internet has forever changed the way hoteliers do business, as technology is granting the consumer more control than ever. The new technology and the other changes our industry has seen during the past decade have made the operations of all tourism related organizations increasingly complex.

As a result, now more than ever, there is a greater emphasis placed on education and training. Recently, education is an important commodity in our industry.

To accomplish our legislative agenda, AH&LA’s government affairs staff are creating or joining coalitions, so that the legislators and the administration see that a regulation or bill does not affect just one industry, but the country as a whole. On any given day our governmental affairs staff is working on over 100 separate pieces of legislation or regulatory issues such as Travel Promotion Act, Card Check Legislation, Health Care, Internet Travel Agencies, Comprehensive Immigration Reform, H2B Visas, Federal Per Diem Rates, and Small Business Administration Loans.

It is great to see that the Travel Promotion Act was passed and became a law. It will create a public-private partnership to develop a $100 million dollar international advertising and educational campaign to better explain the ever evolving, US security policies and promote US travel to attract millions of additional overseas visitors. The campaign will be funded by a proposed $10 fee imposed on foreign visitors from Visa Waver countries who are now required to obtain an electronic visa before arrival. The industry matching contributions would be in cash or in-kind services.

The bill will help attract 1.6 million new international visitors, create $4 billion in new spending, and drive $321 million in new federal tax revenue. The Travel Promotion Act is not only an economic stimulus for the lodging industry but a stimulus for the US economy.

On March 15 and 16, 2010, our members from across the country had the opportunity to participate in our annual legislative action summit and make a difference through coordinated visits on Capitol Hill to share your perspective and opinions on pending legislation effecting our industry with their senators and representatives. The attendees also gained insights from lawmakers and top industry executives on how impending legislation will impact their business decisions.

The issues we discussed on the Hill are:

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  labor issues – Employee Free Choice Act;

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  online travel companies booking tax; and

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  health care.

In January 2009, our Green Task Force developed a series of comprehensive, sustainable Green Guidelines designed expressly to create an environmental-friendly and sustainable hotel. The guidelines include detailed descriptions, resources available, and a business cases along with savings calculations. They provide hotel owners and operators opportunities to reduce operating costs and environmental impacts through reduced utility consumption, recycling programs, employee training, and supply chain management.

Last year on Earth Day we started a 11 week program to challenge hoteliers across the country to track and improve their green business operations by taking the AH&LA Green Guidelines Challenge. It was most successful, the participants completing the challenge were able to identify themselves as eco-friendly establishments based on benchmarking their operation procedures against AH&LA’s 11 minimum green guidelines.

On Earth Day this year, we are launching an Energy Slasher Challenge, a year-long initiative asking hoteliers to track their quarterly energy consumption over the next 12 months and reporting their totals to AH&LA. Each quarter AH&LA will update an online leader board and Green Guru Pat Maher will provide strategies, assistance, and best practices throughout the year to help participants in their quest to slash energy costs. The grand prize is a day with Pat Maher, who will work with the property to optimize their eco-strategy and identify areas to streamline operations.

The association is now in the process of developing a recognition program using the nearly 70 guidelines that focus on energy and water conservation and waste management as well as the best practices that we receive from our members. It will be presented at our November 2011 board of directors meeting that is held in conjunction with the International Hotel/Motel and Restaurant Show.

Diversity has been front and center on our agenda in recent years. Women comprise more than 40 percent of business travelers, and record numbers of women are joining the general manager and executive ranks every day.

The association’s Women in Lodging Executive Council includes the top female executives from 15 hotel companies, and focuses on mentoring, career development, and university outreach. AH&LA’s membership category for female hospitality professionals […] WIL Connect […] now has 530 members and growing.

Another major initiative has been the formation of a new 30-under council. Professional development, networking programs, and industry recognition opportunities are just a few of the initial benefits available through this unique Under 30 Gateway membership which was launched in July 2008 and now has 623 members. Once you are in the work force, join; it does not cost anything if you are working for an association member.

In 2009, we created six student chapters – FIU, Oklahoma state, San Diego state, University of New Orleans, Penn State, and Johns and Wales Graduate Students in Providence campus. Our student membership has nearly 1,535 members; and we are in the process of adding another ten chapters this year.

Cultivating tomorrow’s leaders in the growing and diversifying hospitality community is a top priority for the association, our Women in Lodging Connect, Under 30 Gateway Council of the best and brightest and the Student Chapters are the first step to engage young hoteliers in the association.

To keep abreast of the industry go to our web site: www.ahla.com. It features a weekly blog by Marlene Colucci, Executive Vice President Public Policy, with updates on big issues facing hoteliers on Capitol Hill, and my own personal travel blog, “Tales from the Road”. With about 50 trips a year for both business and pleasure, I always have some interesting stories to tell.

This year for hospitality students that are graduating there is some positive news this year, as some companies are starting to hire again, but it is still a tight job market. The key to your job search is to use all of the resources that are available to you, the school’s career center, your online presence through your social networks, and reach out to everyone you know. It is also most important when you are interviewing that you have a positive attitude, employers hire attitude. A job is achievable in today’s environment.

It might not be your dream job, but it will get you in the front door. Once you are in the door, you need to work hard, but you then have the opportunity to look for other positions and opportunities with your hotel or the company. Companies first promote from within, so make sure you get yourself known through your positive attitude and hard work. As I said earlier, the consolidation of the brands and companies provides you with great opportunities to build a long career in this industry.

As you embark upon your careers, my advice to you is to keep abreast of industry developments and become active in your community and industry associations. They are great sources for networking, building relationships, and giving back to your community and industry.

The hospitality industry is not just a profession; it is a way of life. It is truly a place where you make friendships that stand the test of time. I wish you all distinguished careers and the greatest success. And if there is any way that I can ever be of assistance; please contact me at: joe@ahla.com

This document has been adapted from Mr Joe McInerney’s speech at the University of Delaware.

Joe McInerneyAmerican Hotel and Lodging Association, Washington, DC, USA