A Path Back To Normalcy?
By Dennis Nessler | December 2, 2020
Speaking during a Peachtree Hotel Group investor call yesterday, Hilton president and CEO Chris Nassetta was generally optimistic that another stimulus package will eventually be passed by Congress to provide additional relief for hoteliers and about the prospects of a ‘path back to normalcy’ for the industry in the coming year.
Nassetta was asked by Peachtree Hotel Group managing principal and CEO Greg Friedman about his thoughts on the possibility of a second round of stimulus money, among other things, during the company’s presentation, which was entitled “Outlook On the Future Of The Hospitality Industry.”
The Hilton chieftain maintained he’s far more confident than he was just a week ago. “I’m pretty optimistic something will get done. The question will be how big will it be and when will it get done? They [Congress] were sort of debating 2 to 3 trillion dollars or something like that, nothing like that is going to get done pre-inauguration in my humble opinion. I think they could do less than a trillion [dollars] and then come in late January, or more likely early February, and finish the job,” he said.
Nassetta—who has been actively engaged with Washington, DC lawmakers in both the Senate and the House, as well as serving on an advisory council for the current administration—has advocated for additional stimulus on behalf of the entire lodging industry.
“My primary thrust has been two-fold; we’ve got to take care of the people because if we don’t it’s hard to get the business restarted. We’ve also got to take care of the ownership community because no fault of their own there’s a major liquidity crisis that’s going to turn into a solvency crisis,” he said.
Nassetta further emphasized he sees brighter days ahead for the industry, but he cited a number of initiatives that have been widely discussed and may be needed to boost the overall economy, such as deductability of T&E and/or travel tax credits, as well as a broader stimulus designed to get the American people spending again. He also reiterated the importance of creating more liquidity for hotel owners.
“I’m reasonably optimistic that there will be some element of all that done by the time we get to next spring. You can think of a world where the politics settle down because you’re not in an election year. You can imagine a world where you’re through the epicenter of the health crisis and people feel relatively safe again and where Congress gets its act together and they actually start doing a real stimulus. That could start next spring, or more likely summer, to feel like a pretty good world and a pretty good backdrop for a step change in mobility and a step change in demand for our business on the path back to normalcy,” said Nassetta.
He did offer one additional caveat to any recovery, which is largely dependent on the lodging industry itself, notwithstanding any of the happenings in Washington, DC.
“For me the other thing that’s going to be really important, which I feel decent about, is once you get past all that and you’re on the other side of the health crisis is that we actually stimulate demand,” noted Nassetta.
The Hilton CEO also offered some perspective on the company’s brand lineup, which now includes 18 flags. He noted that in light of the ongoing pandemic the company continues to look at ways to improve the value proposition throughout its brand portfolio.
“We’re going through every single brand to make it more relevant to customer needs, stronger, more efficient to operate. Ultimately so we can drive premium share,” he said, further adding, “that’s a huge body of work that’s going on.”
He specifically addressed some of the changes that have occurred as a result of the pandemic. “We are figuring out how to do it better in a way we think the customers are okay with now, but we think they’ll actually prefer on a go-forward basis,” said Nassetta.
He went on to specifically tout the company’s Hampton Inn and Home2 Suites brands as being “dominant” within their segments while pointing out they are driving over 120 percent market share across their portfolios.
“Hampton is probably singularly and objectively the best hotel brand on earth. If you look at what it drives in customer satisfaction, owner returns, market share, margins; it is a killer brand,” said Nassetta, who later added that Home2 Suites is “crushing it.”