Call it the free coffee cart, call it the abundant May sunshine, call it the joy at seeing the backs of each other’s heads for the first time since 2019, but the mood at IHIF this week was somewhere between bouncy and E numbers.
And fun it was too, with the usual array of gossip (was Sébastien Bazin being stalked by a nun?), deals (Cheval Collection signed a new site in Glasgow, under its Cheval Maison brand) and merchandise (Kevin Edwards at Alliants wearing his ‘Don’t talk to me about tech: Talk to me about benefits’ cap throughout his panel).
New concepts were coined – it’s not the hybrid guest, it’s the ‘whole’ guest – no-one likes the OTAs and technology is still confusing. So a return to the familiar, with those we enjoy being familiar with.
And the mood spread all the way over to the US, where Hilton and Marriott were both having their first-quarter results and having something of a merry old sing song at the same time, as they felt the long-for time travel back to 2019 becoming a reality.
Anthony Capuano, Marriott CEO, illustrated that the group’s focus on luxury (cost-of-living crisis? What cost-of-living crisis?) was paying off, with luxury the standout in the quarter with ADR 27% above pre-pandemic rates. Can this last? It seems unlikely, and it might not do too much for repeat bookings, but one can’t really blame hoteliers for making hay.
Capuano had further good news for owners, with the first quarter named as its best quarter ever for direct digital bookings, which helped drive owner and franchisee profitability, partially driven by higher downloads of the redesigned Bonvoy app, which were 70% above pre-pandemic levels. So yah boo to people who say that no one downloads app. Although at the same time, Capuano wasn’t commenting on what base this increase was made from. It was reassuring enough, given the dominance of the OTAs in leisure and the pandemic leisure focus, that they hadn’t managed to snaffle more bookings for themselves.
One could make a leap and talk about the value of the brand, a leap which would be supported by the company’s conversions, which accounted for 22% of room additions in the quarter.
Good news for Marriott, but potentially bad for the rest of the sector, as construction was slowed by supply chain and labour issues. The threat of cannibalisation within the industry is growing, with, so far, the larger brands doing most of the digesting. The group continued to expect full-year rooms growth to approach 5% and deletions of 1% to 1.5%, leading to anticipated net rooms growth of 3.5% to 4%.
On the side, the group had also seen growth in its home-sharing business. Pre-pandemic, it had 2,000 to 3,000 listings, this was now 57,000 listings – of which all were multi-bedroom full homes. Blimey, you may well think, but the group pointed out it was not going to be a ‘meaningful part of our earnings stream in the near-term’, but was a great offering for loyalty members.
And as for business? Business transient room nights were down between 10% and 15% in March, an improvement over the fourth quarter, where where they were down about 30%. Marriott and the sector in particular was hoping to keep those luxury and leisure rates up to compensate until everything is 2019 again.
Meanwhile at Hilton, Chris Nassetta, president & CEO and always a man for enthusiasm, whatever the weather, was also seeing leisure pushing up rates, and even some rate growth for meetings. For the full year, Hilton expected leisure revpar to exceed 2019 peak levels given “excess consumer savings, a strong job market and pent-up demand”. Business transient would be back by the end of the year.
Nassetta commented: “We expect to see very strong leisure continue. We think we’ll probably have the biggest leisure summer we’ve ever had, only to surpass last summer, which was the biggest leisure summer we had ever seen, prior to what I think we’ll see this summer. And then as we get into the fall and as people are back more in the office, which we certainly are seeing now and expect to see more of, we’re seeing a very nice uptick in return to business transient and return on the group side.”
As at Marriott, conversion signings in the quarter were up 15% year-over-year and represented nearly 20% of overall signings and the group was on track to deliver 5% net unit growth for the year, with Nassetta “confident in our ability to return to a 6% to 7% growth rate over the next few years”.
So everything’s great! IHIF was great, results season is great, it’s all great. But is it all a sugar rush? Central banks are trying to get a grip on inflation and savings could be thrown onto that bonfire. So we’ll see. But what we have learned during the pandemic – now in its hopefully latter stages – is that the big brands are doing what they do: offering owners a perceived sanctuary. But is a sanctuary filled with cannibals the haven investors think it is?