International growth for hotels

BusinessWeek reports on how international growth remains on a steady upward trajectory that belies the recessionary talk in the US. The magazine notes that “this doom-and-gloom talk of a recession with the well-documented problems of the airline industry, and it would be natural to conclude that the lodging business would be equally afflicted. But the numbers don’t bear this out. Commerce Dept. figures show growth in gross domestic product of 0.9% for the first quarter, while a recession is usually defined as two straight quarters of GDP decline. And the lodging industry is projecting almost identical growth figures for 2008”. On a similar vein, the Wall Street Journal reports on Hilton’s massive growth in Asia noting that the company “wants to add 300 hotels to the 47 it already operates in Asia over the next decade, as it seeks to catch up with rivals and cash in on the boom in business and leisure travel in India and China”. And even on the domestic front Marriott reports that growth is “approximately 2%, compared with prior company guidance of 3 to 5%”. That amounts to slowing rates of growth rather than an actual decline.

As before, rumors of the industry’s demise are greatly exaggerated with the age old but true explanation offered in the BusinessWeek article: “The delay between the perceived need for additional rooms and their coming on line is so great that by the time they do appear, the economic cycle has often turned, with supply once again exceeding demand”. Most industry insiders are aware that this out-of-sync activity is one reason for the volatility in the industry but for now, with rate resistance low among customers nationwide the growth trajectory remains upward.

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Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.