Invaluable insights from industry executives

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Today’s Hotelier has exclusive interviews on the latest issues and trends with CEOs representing both business and industry.

by Alicia Hoisington

Leaders of the hotel industry have a lot on their plates from juggling the day to day, to worrying about larger issues at hand that will affect current and future business in an industry that supports millions of jobs.

Even so, many top leaders recognize that for a versatile industry such as hospitality, challenges can become opportunities and risks can pay off in big ways.

Six of the industry’s top leaders spoke with Today’s Hotelier about those challenges and opportunities, defining moments of their careers, technology and consolidation to provide invaluable insights to the industry at large.

THE PANEL

SCOTT JOSLOVE, President and CEO, Texas Hotel & Lodging Association
Joslove joined the association in 2000, and since that time THLA has grown from the fourth largest state hotel association to the largest hotel association in the nation. During his tenure at THLA, Joslove and his staff have successfully passed every legislative bill offered over the last 10 years, and they have led the effort to defeat legislative initiatives that would have saddled lodging operators with additional surcharges, taxes and burdensome regulations. Joslove holds a master’s degree in Public Administration and is a licensed attorney with over 20 years of experience. Prior to joining THLA, Joslove served as chief of municipal affairs for the Texas Attorney General and as First Assistant General Counsel for the Texas Municipal League.

KATHERINE LUGAR, President and CEO, American Hotel & Lodging Association
Lugar is responsible for setting the strategic vision for AHLA and all of its affiliates, while championing the industry’s voice on Capitol Hill, within the administration and beyond Washington, D.C. Working directly with the volunteer officers and board of directors, Lugar has transformed AHLA since joining three years ago, growing the 24,000-strong group to its highest point in the organization’s history and focusing its core mission on advocacy. In addition, she also oversees AHLA’s two affiliate organizations, the American Hotel & Lodging Educational Foundation and the Educational Institute. She has more than 20 years of experience in private sector public affairs, working on Capitol Hill and previously served as executive vice president, public affairs, with the Retail Industry Leaders Association.

ELIE MAALOUF, CEO, The Americas, InterContinental Hotels Group
Maalouf leads the management, growth and profitability of the company’s largest operating region. He is responsible for overseeing more than 3,900 hotels and resorts, spanning the United States, Canada, Mexico, Central and South America and the Caribbean. Prior to joining IHG, Maalouf was senior advisor with McKinsey & Company from 2012 to 2014. Previously, he was with HMSHost Corporation for nearly 15 years, most recently as president and CEO. Before HMSHost, Maalouf spent eight years at Weyerhaeuser Real Estate Company.

CHRIS NASSETTA, President and CEO, Hilton Inc.
Nassetta joined Hilton in 2007. Previously, Nassetta was president and CEO of Host Hotels & Resorts, a position he held since 2000. He joined Host Hotels & Resorts in 1995 as executive vice president and was elected COO in 1997. Before joining Host Hotels & Resorts, Nassetta co-founded Bailey Capital Corporation in 1991, where he was responsible for the operations of the real estate investment and advisory firm. Prior to founding Bailey Capital Corporation, he spent seven years at The Oliver Carr Company, ultimately serving as chief development officer. In this role, he was responsible for all development and related activities for one of the largest commercial real estate companies in the mid-Atlantic region.

CHIP ROGERS, President and CEO, AAHOA
During his tenure as president and CEO, AAHOA has established association records for membership, lifetime membership, event attendance, PAC fundraising and revenue. Rogers also serves as a member of the Forbes Nonprofit Council, the California State University Hospitality & Tourism Management Education Alliance Advisory Panel, Board member of the American Legislative Exchange Council Private Enterprise Advisory Board, member of the Board of Directors California Hotel and Lodging Association and the Board of Directors for Community Leaders of America. Prior to joining AAHOA, Rogers had a long career as a small business owner and public servant. He previously served in the Georgia General Assembly, being elected six times. Senator Rogers was unanimously elected to serve two terms as the Senate Majority Leader.

ARNE SORENSON, President and CEO, Marriott International
Sorenson joined Marriott in 1996. He became the third CEO in the company’s history in 2012 – and the first without the Marriott surname. Prior to that, he served as Marriott’s president and COO. He has held a number of positions, including Executive Vice President, Chief Financial Officer and President of Continental European Lodging. He was elected to Marriott’s Board of Directors in 2011. Sorenson served as Vice Chair of the President’s Export Council. He is the immediate past Board Chair for Brand USA and continues as a member of the board. Other affiliations include: Chair, U.S. Travel Association CEO Roundtable; member of the Luther College Board of Regents; Stewardship Board of the World Economic Forum System Initiative on Shaping the Future of Mobility; and member of the Board of Trustees for The Brookings Institution.

Looking at the state of the hotel industry today, where do you see the biggest challenge? How about the biggest opportunity?
Joslove: I would suggest that one of our biggest challenges is and will likely continue to be securing a full workforce. With a number of major cities across the nation at effectively full employment levels, finding a sufficient number of employees for current, expanding and new hotels is and will likely remain especially difficult. This challenge is also the source of one our greatest opportunities, which is to tell the compelling story of what it means to work within the hotel industry, the myriad of careers, the opportunities to evolve and grow within this industry, and the many advantages of a career within the hospitality sector.

Lugar: Today, our industry’s biggest challenge also serves as our biggest opportunity. In a business of people taking care of people, we could not be successful without the people who coin the 8 million jobs our industry supports. Ensuring hotels can recruit and secure talent for the future generation of hospitality leaders is critical to the impending success of our dynamic industry. That is why AHLA is committed to fueling the talent pipeline. Our year-long Dreams Happen Here campaign focuses on the strength of the industry and most importantly, amplifies the industry’s unique story of upward mobility, providing the resources employees need for fast-track promotions and long-term career opportunities to make their dreams happen in the hospitality business. Through our Educational Foundation we support programs to provide scholarships, training and certifications to current employees and enlisting new talented individuals, and are investing in a multitude of educational and jobs programs across the country to ensure that all individuals who want to join the hospitality community have ample resources and opportunities to do so.

Maalouf: Perhaps the biggest challenge and opportunity as an industry is how we support regional and global economic growth since our industry is so dependent on GDP trends for our expansion. With tourism accounting for 10 percent of global GDP and 6 percent of the world’s total exports, we have an opportunity, and even the necessity, to be drivers of the growth that sustains our business. In the U.S. alone, the travel and tourism industry accounts for nearly 3 percent of the nation’s GDP and supports more than 15 million jobs, according to the U.S. Travel Association. To achieve this goal, we have to remain committed to creating compelling reasons for people to travel and experience our brands, providing our owners with attractive investments in hotel development, forming meaningful career paths for our colleagues, and producing competitive returns for our shareholders. By staying on this proven path, hospitality will continue to generate the investment, jobs and resulting positive impact on economic growth that are good for our communities and our industry.

Nassetta: There are several macroeconomic challenges that our industry is facing, but I’m generally optimistic about where we are headed. We’re living in a golden age for travel and tourism. Chinese outbound travel is exploding; our development pipeline has never been stronger; and the middle class is expanding around the world. All of this together is fueling what I expect to be long-term demand for travel and tourism overall.

Rogers: The biggest challenge remains government regulation. Economic cycles will always have an impact, but policies like employer mandates on health care and overtime, extreme wages, tax increases and rulings like joint employer have a significant impact on the ability to maintain a business and create jobs. The biggest opportunity is really the inverse of too much regulation. Frankly, if government would get out of the way, the lodging industry could expand even more and job creation would flourish. We are hopeful the new administration follows through on plans to reduce regulation and lower taxes.

Sorenson: The biggest opportunity lies in finding innovative, relevant ways to adapt to the new ways that today’s travelers travel. We are seeing new options for everything from the way a traveler books – this is why we prioritized direct bookings and created our Member Rates program – to the destinations they’re seeking; think Cuba. In terms of the biggest challenge, our industry this year will be greatly affected by the new political leadership in the U.S. and elsewhere. The Brexit vote was probably the most-talked about international issue preceding the U.S. presidential election, and both shocked the global travel community. We are monitoring the policy debates over travel, including visa restrictions and immigration reforms. Additionally, we are advocating for changes to our global travel security procedures. Most countries, including the U.S., still rely on antiquated paper passport systems. Estimates are that 1.8 billion international trips will be taken by 2030. In order to move that many people, the vast majority of whom have good intentions, we need a more rational, streamlined and secure system.

Describe a defining moment that led you to where you are today.
Joslove: I was interviewing to be city attorney for the City of Fort Worth and had made the list of three finalists. During that process, I received a call from the Texas Hotel & Lodging Association Board Chair indicating that they were searching for a new CEO to take over the state hotel association. I was a lobbyist and municipal lawyer who had never worked for the lodging industry and suggested that they would be better served finding someone who had worked in the hospitality sector. They told me that they knew how to change their sheets and run hotels; they needed someone who could advise them on how to effectively work with the cities and counties and state government and ensure that they retained a positive business environment. I told them if this is what they wanted, I would very much like to be a candidate. This was 17 years ago, and I have never regretted a single moment as president and CEO of the Texas Hotel & Lodging Association. I have never worked with kinder, more generous or supportive individuals than I have experienced in my 17 years in the hospitality industry.

Lugar: While working in a previous industry to advocate an age-old public policy issue, it became clear that the old playbook in advancing legislative change wasn’t working anymore. We took a completely new approach, and began to run much of our advocacy work like political campaigns – operating a highly-focused agenda, driving the conversation through various media platforms, recruiting non-traditional coalition partners and building industry champions on both sides of the aisle at every level of government. That approach worked then, and I’ve never looked back.

Maalouf: Early in my career, I spent eight years in the home building and real estate industry. My tenure there coincided with the distressed real estate period of the early 1990s, so while the timing wasn’t ideal, the experience and the learning were terrific. I was given more complex tasks and business opportunities. I also learned the value of a strong company culture and character. I saw that during times of turmoil and change, our company was able to persevere through a long period of downturn because we recognized the intrinsic value of our business to the clients and communities we served, and the value of our employees. We harnessed that to keep people and teams motivated, and became more resilient as a result.

Nassetta: The most defining moment of my career took place at a Holiday Inn in Washington, D.C., where among my responsibilities in the engineering department, I spent quite a bit of time plunging toilets. It was that first experience that made me first realize that hospitality is the best industry in the world, and I have never looked back.

Rogers: I can’t pinpoint a single moment, but a series of decisions which led me to becoming part of AAHOA and now leading AAHOA are noteworthy. The opportunity to work with thousands of entrepreneurs each year is special. The men and women of AAHOA are the embodiment of the American Dream. My daily opportunity to be part of their success is something for which I am very grateful.

Sorenson: Accepting Bill Marriott’s offer of a job at Marriott led me to where I am today. I knew I didn’t want to join the company as a lawyer and continue to practice law. I wanted to be challenged in a new way, while helping to grow the business. I left my job with the law firm Latham & Watkins to join Marriott as the head of mergers and acquisitions. That was 20 years ago, and I’ve loved every minute here.

A top issue for the industry is finding quality talent. Where should hoteliers look that maybe they aren’t looking yet?
Joslove: Finding quality talent is a challenge for our industry and all of the commercial sector. I would suggest that one of the best sources is to promote interest within the hospitality industry in high school and in our colleges and universities. Many people do not realize how many career options exist within our sector and how quickly they can rise within our ranks.

Lugar: Hotels are extraordinary job creators in communities across the nation, supporting 8 million jobs across the country. In fact, a typical hotel with 100 occupied rooms per night supports 230 local jobs every year. And filling those jobs can be the greatest challenge facing our industry today. The leaders of our member companies, big and small, tell me repeatedly that filling the talent pool is their greatest challenge. That’s why at AHLA we are committed to fueling the talent pipeline. Through our Educational Foundation we are supporting programs to provide scholarships, training and certifications to our current employees and enlist new talented individuals to our industry and allow them to build life-long careers. One particular program that we are currently engaged in is an apprenticeship program in partnership with the U.S. Department of Labor, the National Restaurant Association Educational Foundation and Jobs for the Future to welcome 225 apprentices in the lodging industry alone by September 2017.

Maalouf: Recruiting, training and developing people to work in our hotels is one of the biggest challenges we face; it’s the people that bring our brands to life and really deliver true hospitality to our guests. We developed IHG Academy as part of our Responsible Business agenda to provide training programs for roles in hospitality. In 2016, nearly 12,000 participants benefitted from an IHG Academy program in place across 75 countries. It’s our collective responsibility to showcase the benefits of working in our industry – especially since one in every nine American jobs depends on travel and tourism. A career path in hospitality and tourism can take you around the world, and it’s one of the few industries where you can start at the front line and work your way to the most senior levels.

Nassetta: An astonishing 71 million young people are currently looking for work. These millions of bright minds could be helping to power our industry forward – and could be filling many of the 86 million new jobs that the travel and tourism industry is expected to create over the next 10 years. At Hilton, we’re paying close attention to this pool of talent. In fact, we have pledged to impact at least 1 million young people by 2019 by connecting them to the world of opportunity in hospitality, offering personal and professional skills-training and mentorships, and employing them directly. To date, we have reached hundreds of thousands of youth around the world, and we’re encouraging others to join us in hiring the young people who will be our industry’s future leaders.

Rogers: I believe the problem extends beyond finding the talent to keeping the talent. The average time an employee stays with a company is shrinking rapidly. The movement of talent must be at an all-time high, which means searching only among those looking for a job is inherently limiting. Creating a network for communicating opportunity throughout the industry is key. Employers are likely going to be more successful attracting talent from fellow employers. It seems aggressive, but it is today’s reality. This of course means keeping talent is now the most difficult challenge. If you are not listening to the needs of your most talented team members, they will leave.

Sorenson: We are in the business of making people feel welcome, so we need talent who can make a good hotel experience a great experience. One of our hiring mantras is to “hire friendly, train technical.” We look for people, whether from hospitality or other industries, who are smart, genuine, smile and naturally treat people well. It’s a formula that has been a key to our success for 90 years.

Describe the most impactful way you think technology is helping to shape the industry.
Joslove: Technology allows us to be more effective in every aspect of hotel operations from the physical facility to the ways that we service and respond to our guests. We can now do things quicker, document issues more effectively, and provide ever better service and responsiveness. The most impactful way it impacts our guests would arguably be in our ability to use technology to be more responsive to our guests’ needs and efficient in our delivery of services. When you are traveling, you want to feel taken care of and pampered in an immediate fashion. Technology helps drive our ability in this regard.

Lugar: Technology has transformed travel, from the ever-evolving online channels, to desktops to mobile phones and internet-enabled devices such as smart watches. As a guest-centric industry focused on superior customer service, the hotel industry is driving innovation, technologies and new methods to continuously improve the guest experience while connecting with millennials and future generations. Technology also allows hotels to directly interact with the consumer, customizing guests’ wants and needs before they walk through the door and beyond the stay even after they’ve checked out, and improving that one-on-one engagement to provide exceptional and personalized service. And with hotels’ key focus on innovation and delighting customers with new experiences, innovative technologies are pivotal to integrating new customer experiences into a seamless stay – everything from customized digital art in your room, to personalized robotic butler services – these advancements will make traveling, staying and enjoying easier and more user-friendly than ever before.

Maalouf: Broadly speaking, the five major technology forces shaping many industries are mobile, social, cloud, e-commerce and search. All five of these forces underpin the technology landscape for the hospitality industry. Travelers are never far from their mobile devices, tablets or laptops, so it’s important to develop ways to add real value through on-property and mobile technology. This requires hotel companies to be more nimble and flexible in how they allow guests to access and engage with their brands, and in how guests use technology.

Nassetta: At Hilton, we believe technology is really about helping us take what we do best – providing exceptional hospitality – and delivering it to guests in even more ways. Whether it’s leading the industry with digital check-in and room selection, as well as Digital Key, or working with innovators like Amazon to offer exciting new perks for our Hilton Honors members, technology is really helping us deliver next-generation hospitality.

Rogers: Access to property review information along with instant pricing is placing more and more power in the hands of consumers. Competition on price and quality are absolute realities that force every individual hotelier to seek better and better performance. This level of competition can be exhausting, but it is ultimately rewarding as the industry competes with alternatives like short-term online rentals.

Sorenson: Marriott is creating what we like to call “raving brand fans” by leveraging technology to customize and personalize our guests’ experiences before, during and after the stay, and also both inside and outside our properties. For instance, we’ve re-launched our Marriott Rewards Mobile App with new functionality that customers will use far more regularly than to simply book a stay. With the app, they can read our Traveler digital magazine content to inspire their next trip or use the app’s Keyless Entry function to unlock their door at select properties without ever stopping at the front desk. We’re also getting ready to expand the deployment of beacons in around 500 hotels, and they can help provide very personalized service that we think customers will love. Consider this scenario: Using beacon and other technology, if you’re someone who typically works out when you travel, a hotel could send information to you even before you ask about its fitness facilities and hours of operation.

Where do you see the consolidation landscape five years from now?
Joslove: There are many people who are likely to have much more erudite thoughts on consolidation than me. As an industry observer, I would suggest that consolidation is a trend that is continuing and one that we need to anticipate being very much part of our landscape and way of doing business.

Lugar: With the latest research showing that consumers visit seven to 10 websites before booking a reservation online, it’s imperative that the evolving digital marketplace continues to prioritize consumer protection and transparency. As new options for accommodation bookings advance and evolve every day, there has been significant consolidation in the online travel agency (OTA) marketplace. Unfortunately, a clear majority of consumers, 82 percent, are unaware of how many affiliate brands are owned by just a few major companies, with two mega-companies now accounting for 95 percent of U.S. online travel bookings. We remain concerned that this trend of increased OTA marketplace consolidation can limit consumer choice and may hurt small businesses. Though OTAs are an important partner to the hotel industry, the rise of some deceptive marketing practices aimed at manipulating travel and hotel search results are disturbing, particularly because many consumers are none the wiser. There has been an uptick in some of these practices, which involve pay-to-play and require hotels to pay more for higher placement. Biased or misleading search results from these sites or via web searches can be highly problematic for the consumer, particularly on those websites that purport to be helping consumers comparison-shop based on less than objective information.

Maalouf: It’s not unusual for consolidation to occur in industries where building global scale is relevant. And still, there are good organic growth opportunities, both at the top and bottom line. This isn’t a zero-sum game. We have global scale at nearly 5,200 properties representing 770,000 guestrooms in almost 100 countries. We continue to grow through various levers, which are organic growth through expanding the footprint of our existing brands; new brands we may introduce such as Even Hotels; and new brands we may acquire that fit within our strategy, like Kimpton Hotels & Restaurants. So we have a compelling, well-established, long-term strategy for high-quality growth that’s working.

Nassetta: I think we’ll continue to see consolidation across the industry as brands look to better serve their existing guests and reach new ones. At Hilton, we’re continuing to focus on our organic growth strategy, leveraging the best pure-play brands and portfolio in the business to drive premium returns for our owners and shareholders.

Rogers: Absent government intervention creating artificial barriers to entry, competition will limit long-term consolidation. As current entities merge, new entrants will join the market. It is the nature of a highly competitive de-regulated industry. There is also the looming question of how the branded/independent ratio is impacted as consumers have access to more information. Finally, the hoteliers and brands that maximize individual consumer data to create unique guest experiences will thrive. Those who do not will be much smaller in five years.

Sorenson: While our merger with Starwood was a once-in-a-generation deal, I believe our industry will continue to see additional merger and acquisition activity in the years ahead. The world is changing quicker than ever, and that’s true of our industry. While we are still working hard to make sure our merger is a success, I think our transaction with Starwood signaled that these types of deals can make sense for associates, owners, development partners and consumers because they can create incredible scale, efficiencies and opportunity. In five years, we’ll probably see some interesting pairings that don’t currently exist.

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