The FINANCIAL — According to ehotelier.com, the U.S. hotel industry is looking to the Middle East and Asia for growth as the domestic economy slows down.
Company executives told an annual New York University hospitality conference this week that Eastern markets offered huge opportunities just as weaker consumer spending, troubled airlines and sky-high gas prices might threaten their domestic businesses.
"The center of gravity is moving east," said Hilton Hotels Corp Chief Executive Christopher Nassetta.
Nassetta said he expected hotels to spring up at a fast pace in the Middle East, India and China during the next few years.
Customers in these markets are more loyal to good brands, he added. "There is huge demand for all our brands in Asia-Pacific."
Such brand loyalty translates into good room rates, according to David Pepper, a franchise development executive with Choice Hotels International Inc , which operates Comfort Inn and other budget chains.
Asked to look three to five years ahead for the industry, Global Hyatt Corp CEO Mark Hoplamazian predicted a "generational shift" where a growing consumer middle class in India and China will flock to hotels.
Meanwhile, the Middle East has become such a hotbed of investment that U.S. banks are sending top bankers to head up offices in the region as markets there grow fast.
"We have huge liquidity coming out of the Middle East," said Trevor Horwell, chief hotels officer with Hard Rock Hotels Worldwide.
U.S. CONTRAST
The promise of the East contrasts sharply to the problems that many expect for hotels in the United States.
Barry Sternlicht, chief executive of hotel investor Starwood Capital Group, told the conference that the U.S. hospitality and gambling industry was facing a tough 18 months.
In April, leading U.S. hotel operators Marriott International Inc and Starwood Hotels & Resorts Worldwide Inc reported lower quarterly profits as the slowing economy hurt travel spending.
Oil prices have roughly doubled in the past year, and hotel industry experts are concerned about the effect this will have on consumers as the summer travel season gets under way.
Another worry is cuts in airline routes as carriers shrink services in an effort to counter record jet fuel prices.
On Wednesday, United Airlines parent UAL Corp said it would slash its domestic capacity and its labor force, following similar cuts by rivals.
U.S. airlines have raised fares, added new fees and surcharges, cut jobs, and reduced services and capacity. Seven small airlines have filed for bankruptcy or stopped operating in recent months.
Property and casinos magnate Donald Trump told the conference that the credit crisis was hurting the U.S. hospitality sector, saying financing today is "the worst ever."
All this gives U.S. hotel company executives good reason to target the Middle East and Asia for opportunities, industry executives said.
"We know things can get built in the Middle East," said Starwood Capital's Sternlicht. "It's becoming a haven for a lot of new money — it's amazing." (Editing by Lisa Von Ahn)
Discussion about this post