How Big is Too Big – Are Brands Really Listening to What Travelers Want?

Episode Transcript

David Eisen: And I think the entire downtown corridors, the great cities across America are going to be going through this transformation. They used to be a locus of commerce and business, and I think a lot of these cities are going to go through this rebirth where it’s like, instead of that, it’s going to be more about a cultural shift, these cities becoming places where people live. There’s the big diaspora into the suburbs. Now, people are going to come back to the cities, but because these cities are going to be changed to places where you want to have a family and you want to raise a family there.

Robin Trimingham: Welcome to The Innovative Hotelier podcast by HOTELS magazine, with weekly, thought-provoking discussions with the world’s leading hotel and hospitality innovators.

Robin Trimingham: Welcome to The Innovative Hotelier, brought to you by HOTELS magazine. I’m your host, Robin Trimingham. It goes without saying that the buzzword in the hotel development sector at the moment continues to be consolidation, but what’s actually driving this trend is this, in fact, the golden age of travel, in which hoteliers utilize technology to interpret and meet guests’ expectations like never before, or our high interest rates and economic volatility driving changes which largely ignore new traveler preferences. Join me now as I chat with HOTELS magazine’s editor-in-chief, David Eisen, to try to decipher whether big brands are really listening to what travelers want and trends that will define the industry as we move into 2024.

Robin Trimingham: FOH is a global food service and hospitality company that manufactures smart, commercial-grade solutions. Headquartered in Miami, the company designs and manufactures all their restaurant and hotel products. They have showrooms and distribution centers located throughout the globe, and their products are always in stock and ready to ship from any of their distribution centers worldwide.

Robin Trimingham: Welcome, David. It’s great to get a chance to catch up with you again.

David Eisen: Robin, it’s great to be back. It’s my second time. Hopefully I do better than the first time. We’ll see.

Robin Trimingham: Oh, you were great the first time, so you set the bar pretty high for yourself.

David Eisen: You’re a very good liar, I appreciate that. Thank you very much.

Robin Trimingham: Oh, no not really. So today we’re chatting on about what’s going on in the business behind hotels. I guess I think it’s fair to say that the buzzword in the hotel development sector, pretty much all this year, has been consolidation. How much of this would you say is being driven by interest rate hikes? And what makes you say this?

David Eisen: It’s a great point. It’s, well, I would look at not so much, I guess, consolidation. We’re seeing we’ve seen a little bit of consolidation kind of in the in third party management sector. We’re waiting on more consolidation. Whether we saw this, we’ve seen this play by Choice Hotels for Wyndham, which has been, you know, all over, well, I wouldn’t say all over the news for the consumer, but for us in media, in hospitality media, it’s been all the rage, so to say, so to speak. It’s been this saga of back and forth, and ‘he said, she said’ and, as we sit here, what’s today, November 6^th?

Robin Trimingham: Yeah.

David Eisen: It’s still ongoing. But so what? We’re still seeing how that kind of is all played out. But I think interest rates in general, I mean, they’ve driven up cap rates. It’s made it harder for hotel company, well, it’s made it harder for people to build new hotels, right? So, you have to be a little bit more savvy with your cap stack and where you’re looking to get debt from, if you’re looking to build. But there hasn’t been a lot of new development in that regard because it’s harder. Money used to be, years when we had zero interest rates, money was free, basically. Nowadays, and I’m no finance guru, but you’re looking at cap rates that are higher than interest rates, which makes it difficult to build new products. And what we’re seeing then is that a lot of hotel companies, the way that they grow is by net unit growth. So, it’s harder to add new units, new rooms, new hotels when people aren’t building hotels, because that’s what it’s like a shark: they can never stop sleeping, they always have to keep moving forward.

David Eisen: So, what a lot of them have relied on now from Hilton and Marriott, IHG all the way through, are looking at conversions, where it’s basically like a hotel comes up for relicensing or it goes through a transaction and it’s unencumbered. They want to get their name on the door, and it’s obviously it’s quicker to do that, to convert a hotel to a new brand than it is to build a new hotel. So a lot of hotel companies are really focused on that focus on conversions. I think even in Hilton’s Q3 and Marriott’s Q3 number earnings call, they’re talking about 30% of their new openings are conversions. Hilton launched this brand, Spark by Hilton, which I’m actually going to attend to the second opening of one, and it’s going to be in Germantown, Maryland. The first one, I believe, was in Connecticut, in Mystic, Connecticut. But they’re opening a second one in Germantown, Maryland, which is very close to where I live, that will be presided over by Chris Nassetta, who’s the CEO of Hilton. And if you get the CEO there, I think it really matters. This brand matters to Hilton because it’s really an easy way to keep generating new hotels through that conversion model. So, I think that’s something we’re going to continue to see moving forward until maybe the fed backs up on interest rates, but we could be in a higher interest rate environment for longer than maybe people would like.

Robin Trimingham: I think you’re making a fair point when you talk about the conversions. How much of this, though, do you think is a knee-jerk reaction to the state of the market, the state of borrowing, and how much is actually really like strategic long range development planning at work?

David Eisen: I think it’s something that is not a fad, but it will continue to be a trend. And especially when we were looking at the midscale segment. Now, that’s where a lot of the hotel companies are really focused now. They all have, well, not all of them, but they have luxury product, upper upscale, those types of hotels you don’t see too many conversions on at the luxury level of the segment, but we’re seeing it a lot in the midscale segment, the select service segment. That’s where a lot of the focus is now. When you see all these new brands that are popping up from your normal Midscale brand segments called premium economy, which didn’t even wasn’t even around two years ago, but now it’s a buzzword, premium economy. We’re seeing Midscale extended stay. That’s really where like the brand focus is now. It’s really down market, you would say. So that’s really where the kind of focus is now. I don’t think it’s a fad. I think hotel companies are going to continue to push that. They go where the market goes. I mean, and I think a lot of these hotel companies are typically ahead of the curve, maybe not so much ahead of the curve when it comes to technology and the tech stack, that’s what everyone talks about, but especially development. Brand people that are very savvy, people that know these people, they’re ahead of the curve and they can see it coming. And they know that in this higher interest rate environment, where it’s going to be harder to build new hotels, they’re all fighting a lot for the same owners, the same developers, the same franchisees. So, it’s really an arms race and it’s all about how to get that what they call that, that NET going forward. Net unit growth. And I think conversions especially down to the midscale segment, that’s where you’re going to continue to see the growth.

Robin Trimingham: Yeah. When I hear the phrase ‘premium economy’, all of a sudden I’m thinking about how the airlines price their seats. And it seems like every time you turn around, there’s all these different subsections of how you can book and when they’ll let you on the plane and all of that kind of stuff.

David Eisen: It’s a good point. I think, that the hotel industry has long been if you go to a lot of conferences, people will say, ‘Why aren’t we taking, why doesn’t the hospitality industry or the hotel industry take more of an approach like that?’, which, if you don’t want to use the euphemism, it’s basically nickel and diming people, right? So, it’s I’ll charge you to and that’s the whole thing with resort fees, the junk fees that everyone is talking about, charging you for these ‘a la carte’ services that you used to think were just part of your stay. Now, what’s interesting, but let’s be honest, I mean, the hotel industry is certainly different from the airline industry, which is very much down to every penny and optimizing this, optimizing that. I mean, the hotel industry, obviously, it’s gotten much more expert in revenue management, that kind of thing. But I think it also comes down to, it’s always still, no matter we talk about AI technology, it’s still a one on one, face to face business. Actually, I remember, I think, I don’t know, maybe I’m making this up, but I think Bill Marriott, I had the pleasure of speaking at once years ago, but the hospitality industry, it’s not about nickel and diming. A lot of these hotels will still give it to you gratis, because that’s what hospitality should be. You know what I mean? It’s not about finding ways to keep charging people for this and that.

David Eisen: But I do think there are a lot of hotels out there, as things evolve, we’ll take more of a tech kind of approach, and a lot of that will come with, to your point, the premium economy or charging for this, charging for that. But at the same time, I think it also when you do things like that, it gives more power to the consumer as well. So, I’d love to be able to go on a website and how many times have you made a reservation at a hotel? You have no idea which room you’re going to get. And invariably for me, because I had the best luck in the world every time, for some reason, I check into a hotel they give me the room right next to the elevator, which is always opening and shut at 2:00 in the morning and there’s loud people. So, to be able to give the control to the consumer, to choose not only the type of room, but where in the physical plant to have it. Now, I know that’s more difficult with the way that housekeeping is and cleaning rooms and getting them ready, but if you put control in with the consumer’s reach, they’ll pay for it. If they’re able to really customize their experience when it comes to that. Yeah, that’s how I see it. But it’s a good point about the airlines.

Robin Trimingham: Actually, you’re really on to something. When the hotels get to the point where the customer can choose their room. I mean, that’s what we’ve all wanted all along.

David Eisen: Yeah.

Robin Trimingham: It’s interesting, though, to think about whether the hotel is themselves, the brands are actually listening to what the customers want or not in the midst of all of this. I was looking at one of the brand new, I’m going to call it sub-brands, and I’m not going to call them out by name, because what they were actually promoting was a very plain room that was so plain. It doesn’t even have a coffee maker. But the selling feature was, ‘Oh, but we have a 24-hour coffee shop, our Starbucks kind of place in the lobby. And we also have a 24-hour bar’.

David Eisen: Right, right.

Robin Trimingham: I don’t know about you, but I’m powered by caffeine. And if somebody said to me that I wasn’t going to get a coffee maker in my room, I’d be like, next, but my age, I’m not going down to the lobby to get my coffee in my PJs. That’s just not going to happen.

David Eisen: Okay, so I’ll push back on that only because I think it’s, I think it’s good that I pushed back on it because it’s totally preference.

Robin Trimingham: Sure.

David Eisen: Okay, the only coffee makers I will use in a hotel room that I have before are like the Nespresso ones with the pods. Those are like a nice amenity to have. Knowing what I know, there are a couple things in the hotel room that never get cleaned and I’m assuming, guessing a lot of the time. It’s a coffee maker, so I wouldn’t. I’m not even a person who’s going to get the water from the bathroom, put it in the cylinder in the back. But I’m also like a coffee. I love coffee, right? So every morning I grind it. I do the pour over thing. It takes longer, but it’s like a ritual. And it’s funny because I was reading someone’s I think it was a LinkedIn post talking about the same, the very same thing, that they were booking a hotel in, like, and there was no coffee maker in the room, but for me that would never -but it’s different for other people, it would never be a deciding factor for me- I could care less if there’s a coffee maker in the room. But, to your point, you want to be able to get up, go through that and not have to go downstairs to get the coffee. And this is a little bit of a tangent, but to your point about this sub-brand, and I’m, I won’t try to guess it on air, I could.

Robin Trimingham: I’m sure you could, everybody.

David Eisen: Well, but, this gentleman on LinkedIn was making a good point that there are brands out there or hotels out there that really should focus on doing maybe a couple of things really well, whether it’s like they have the best coffee in their coffee shop or they have some kind of amenity or service, they, I don’t know, off the top, but they do a couple things really well. And that really, I think, makes you distinct from others, right? That might be doing everything to everyone and being generally okay at everything. But if, for instance, sometimes people go to a restaurant because they know it has the best vegetarian lasagna on this side of the Mississippi, and that’s the one thing they do really well. Everything else might not be fantastic, it might be blah blah, but they go there because they know there’s that one special thing there. So, if I was building a hotel today, which I’m not, because again, it’s too expensive to build hotels nowadays, we talked about this, but if I was doing something like that, I would focus my brand on being able to deliver a couple or a few really exceptional things and let everything else fall in line from there. But yeah, coffee. I know coffee is such an issue for everyone, I know, but for me, I’ll put on a hat. Maybe not pajamas, put on some sweatpants and go down to the coffee bar to grab a cup in the morning. So.

Robin Trimingham: Well, I can agree with you that coffee is a very controversial subject for everybody in all of this, though, to what extent, when they make these decisions, do you think the brands are really listening actually to what their customers are saying? And to what extent do you think they’re just crowd following, ‘Oh, this brand and that brand are doing this, so we better do it too’.

David Eisen: Yeah. I mean, they say they are every time you hear, ‘Oh, we listen to our customers’, and they put out surveys. Part of a loyalty program is supposed to be able to track these preferences of people, right? So, I mean, that’s a whole other debate, uh, loyalty programs and the kind of the, the efficacy of them, whether they really do what they’re set out to do because, I mean, I’m not like a prolific traveler, like I have friends who travel banker guys, friends of mine who are traveling hundreds, hundreds of days a year. And they go to the same hotel, and even so, they go to the same hotel every time. It’s like, oh, it’s not ‘Welcome back, Mr. Fox’, it’s almost like they’ve never been there before. So, I think hotel companies say they’re listening. Whether they’re not, I’m not really sure, but they should be listening to their customers. I think they do. But at the other side of that, they have to listen to their developers, their owners. I don’t know what’s more important, the franchisee or the customer, right? I mean, that’s another good debate because hotels Marriott’s, the Hiltons, the IHGs, the Choices, they build brands for customers. They also build brands for the people who are going to be actually putting the money behind them, the owner, and more and more, it’s all about how to increase profit margins for owners and sometimes, I mean, stripping things out.

David Eisen: So, while you might think that coffee maker, there’s a cost to that, there’s a cost to everything in a hotel. So, even pulling out a coffee machine in, say, a 200 key hotel or removing nowadays the trend in these kind of lifestyle, boutique even -there’s so many names now- lifestyle, you can have a lifestyle boutique hotel that’s a midscale hotel, but there’s no door on the closet anymore, right? So everything’s open. There’s a cost to that. My funniest thing is going to hotels that have a shower, but they only have glass door. It’s more in Europe. There’s many. So, they just forgot, and then the water gets everywhere, so it’s like the worst. That’s the perfect example for me. So the showers that have half glass doors, so the back half is open to everything. It’s the most uncomfortable showering experience. Water gets everywhere, so like I can’t imagine any guest being like, ‘Oh, this is a great experience’. Like for me, I like to be enclosed. I want the steam everywhere, right? But I guess maybe they’re like, ‘Okay, it’s cheaper to do a half glass door than a full one, so we’ll just stop there’.

Robin Trimingham: Part of it’s cultural. You’re making me remember. Have you ever been to one of the old school small European hotels where there’s no glass? There’s no shower curtain at all, and supposedly the floor is going to slope towards the drain and you’re going to have your shower. And miraculously, the toilet seats are going to stay dry. Well, of course, that never happens. I had this one experience. Oh gosh, it was a long time ago, but not only did everything in the bathroom got soaked, I had my roommate, who I was traveling with, hammering on the bathroom door. I’d flooded half the bedroom and I didn’t even know.

David Eisen: Yeah, the cost, you might say, for doing the half glass door you might lose because of all the mildew and cleanup you have to do. You have to call service.

Robin Trimingham: You can’t even think. Yeah.

David Eisen: I actually was once at a in a bathroom that actually had the same thing you’re talking about. No. No curtain, no shower curtain, no anything. And the floor was carpeted. I guess it’s a European thing. Maybe us Americans, we like to be enclosed. I like to be ensconced. Is that the word?

Robin Trimingham: I can’t even imagine. Maybe we’re supposed to know that. Oh, no, you don’t really use the shower.

David Eisen: Maybe. Yeah. I mean, it’s like, maybe it’s like an anachronism. Like a bidet. Like. No. Who uses a. Well, yeah. I don’t know. Bidets, I think, are actually making a comeback. Not so much for me, but I hear there are a lot of people are into bidets now. But it goes back to your point. The problem is that everyone is unique, and it’s hard to, when you’re building out a brand, you know, it used to be every Marriott looked the same no matter if you were in.

Robin Trimingham: Oh, that was their thing. Yeah, that was orange carpet everywhere you went.

David Eisen: And that’s how people liked it. But now everyone thinks, well, everyone in the world is like ‘I’m unique and in my likes and dislikes are going to be different from that person’s likes and dislikes’. And that’s true. I mean, that’s what makes that’s what makes a human being. It’s like, I like to wear this, to wear that. I like to eat this, I don’t. So when you’re building a new brand, it’s very hard to be everything to everyone. Going back to my point, being really good at a couple things.

Robin Trimingham: I think you’re really onto something there, because on the one hand you have, I’m going to call it the old school 4 to 5 star luxury property that gives you everything. And then on the other extreme, you have the Japanese capsule hotels where you don’t get anything, but they have all these vending machines on the floor, and you can pick and choose, I want a toothbrush, I don’t need a towel, I need this, and you just get the what you need. In an odd way, where I’m not really pushing the capsule hotel concept, I like that idea that instead of having to travel with every last amenity in the world, because you never know what the hotel will or will not have when you get there, that you can really easily pick and choose just what you need.

David Eisen: Yeah, it’s like the old Automats, remember those? Like, well, yeah, I’m too young to actually remember those. I will say that.

Robin Trimingham: Yeah, okay.

David Eisen: I watched a documentary, I think, with Mel Brooks. He did one on Automats. But it goes back to the idea of when you travel, you’re in control of what you if what you want and what you don’t want. Now, there are people like, for me, luxury hotels are fantastic. I mean, who doesn’t love a luxury hotel? But along the way, there, it’s like sometimes the services may be too delicious, like on top of you for everything. Like you get out of the car or taxi or Uber and you have like a little bag with you and the guys grabbing it. Let me take that for you. Even my luggage. Fine. But it’s like I can get it myself first of all, because I’m not feeble yet. But there’s always like that annoying. Okay, you check in. Where are my bags? You’re flustered. I don’t have my bags on me. Something you really might need is in there. And this is my biggest pet peeve. Checking in, going up to my room, and where are my bags? They’re not there. And I’m sitting around waiting 20 minutes.

Robin Trimingham: Or an hour.

David Eisen: Yeah, and your bags are up there, where? I could have just done this on my own, but for some reason, I gave it over to them. And then they come up, and then you have to go through the song and dance. Luxury can sometimes be too much or overbearing. Sometimes you really want that. But, you know, maybe for a corporate business transient, someone who’s just in and out and doesn’t want all that, it can be a little bit overbearing. But that’s the great thing about travel. You can make it what you want. Back to your point, a capsule hotel. I mean, when you hear capsule, I’ve stayed at these two, like a pod hotel. They do things really well though. But your room is the size of, it’s a bed basically in there. Yeah. You’re not going to be able to do your yoga routine or your calisthenics in the morning, or whatever you might do. It can be tiny, but if you know that going in, then.

Robin Trimingham: You’re prepared for it.

David Eisen: Yeah, prepared for it. Correct.

Robin Trimingham: Established in 2002, FOH is a woman-owned, global food service and hospitality company that manufactures smart, savvy commercial-grade products including plateware, drinkware, flatware, hotel amenities and more. Driven by innovation, FOH is dedicated to delivering that wow experience that restaurants and hotels crave, all while maintaining a competitive price. All products are fully customizable, and many are also created using sustainable, eco-friendly materials such as straws and plates made from biodegradable paper and wood, and PBA free drinkware. FOH has two established brands: Front of the House, focused on tabletop and buffet solutions, and Room 360, which offers hotel products. Check out their collections today at fohworldwide.com.

Robin Trimingham: So, in all of this, if I asked you which brand is actually listening to their customer, does anybody stand out to you?

David Eisen: Oh, wow. You’re putting me on the spot there. I don’t want to exclude anyone. I’ll put it this way. It’s interesting. On Hilton’s call, their Q3 call, I will say this about earnings calls, earnings call are just are really are great to listen to for any kind of industry because you get to hear the CEO speak and you get people. And there’s a Q&A session where they put on the spot. CEOs are the best marketers of their hotel companies, like they’re the chief marketing officer. They’re the best person who’s going to talk. Nothing is ever bad. It’s always optimism, which I think is important, first of all, for them. But for instance, Hilton made it very clear, and this is listening to their subset. They don’t have a -they call it- luxury lifestyle brand. They have their high end, they have their Conrad, they have their Waldorf, which, that’s their luxury-end tier. And they have LXR, which are really beautiful, nice hotels too. But they don’t have like a Saint Regis, they don’t have a Ritz Carlton. But that’s pure luxury. What they don’t have is what you would call luxury lifestyle. I always equate with W, the W brand, which was a seminal brand in the space started by Starwood, now obviously owned by Marriott, whenever, whatever.

David Eisen: But and they’ve gotten to scale with that. But Hilton doesn’t have one. So they’ve made it a promise that they’re going to launch one, a new brand, to fit that space in 2024, because by listening to their guests and Cris said, their CEO, was talking about how ‘We don’t have a brand to give them, so we’re losing market share, we’re losing out on customers. We’re not only losing out on customers, we’re losing out on potential developers who want to build these luxury, be in this luxury lifestyle space’. So, I think in terms of like amenities and services and all that, I think it’s important these hotels, they’re listening to their constituents in regards to what they need to be in the market with, because they don’t want to lose out and capture that potential market, which Hilton, to their, they’re being frank, frankly, was saying to not only us journos but to the investment community that they’re literally losing out on money. And that’s why they’re putting out this kind of new brand to fit that luxury lifestyle space. So, in that case, they’re listening to their guests and what they want.

Robin Trimingham: Excellent example. Let’s change the subject here a little bit and go back to something that you alluded to very briefly earlier in our conversation. For weeks, it seemed, at least to me, like the Choice/Wyndham merger was essentially a done deal. Everybody was talking about how this was absolutely going to happen. And then a week or two ago, we had Wyndham’s earnings call. And, most of the call, I understand, was devoted to explaining why the board rejected what was essentially a $10 billion bid. What’s your take on this situation?

David Eisen: It’s great drama. I’ll say that, first of all. What’s interesting in the Wyndham call, the Q3 call is that, so, Stephen Holmes is the chairman of the board at Wyndham. He hadn’t been on an earnings call for something like six years. So, he’s making this valiant return. Choice came out with an initial offer. It was rebuffed. They came out with another offer, was rebuffed. I think it came out at the third $90 a share or whatever it was. And Wyndham was basically saying, their position was, ‘Look, that offer, isn’t it’ Well, they even say it’s enough, but they’re like, ‘we’re better as a solo company basically, we don’t need Choice basically’ is what they were saying. And then it obviously got out in the open and everyone was like going, volleying back and forth. But Stephen Holmes is just very candid with it and was like ‘We don’t believe this offer is in the best interest of our shareholders, our franchisees’ so forth, for a litany of reasons that I won’t even get into, but I don’t know where it goes from here. I don’t think it’s over, per se, because behind the scenes you don’t really know. But it could it be posturing by Wyndham to just keep cranking the price up? No one takes the first offer, right? It’s always like they made an offer. But here’s the thing, though. Obviously, there was some sort of inkling of potential for this deal happening because we know from what’s out in public that Wyndham was taking meetings, Stephen Holmes was speaking to Pat Pacious, the CEO of Choice.

David Eisen: So if they, if he never, if Wyndham never had a kind of inkling to potentially do a deal, then they probably would have never taken the meeting. Now, I think you have, I guess, when M&A, mergers and acquisitions come up like this and there is some kind of offer on the table, you have to listen to them because you’re a publicly traded company and you’re not doing what’s best for yourself, you’re doing what’s best for the shareholders, right? But it’s interesting. Stewart Bainum, whose father created Choice Hotels, there’s a friend of mine in the industry, and he actually worked for both Choice and Wyndham at two separate times, obviously not at the same time. But he told me that Stewart Bainum is the kind of guy that if he sets his sights on something, normally he’s not going to lose out on it. So, it’s been a little bit quiet. I mean, I don’t know if you put the word that Wyndham is unequivocally said no to this deal, but there could be another offer coming out that’s higher than the initial $90 per share bid. But right now it’s like at a standstill. Who knows where it will go from here? Interestingly enough, the biggest deal, another big deal came down the chute this morning, if you might have seen it: Hilton’s Grand Vacations is going to look to be acquiring Bluegreen vacations, its vacation ownership, it’s a $1.6 billion deal.

David Eisen: And, interestingly enough, Bluegreen had a marketing alliance with Choice. So now, Hilton is acquiring that business in the kind of vacation rental segment. So, there’s deals are happening, obviously, but the big one, Choice/Wyndham, and I had written about this before, like, we haven’t seen a mega deal like this since really when Marriott acquired Starwood some, I think it was, what, seven years ago? That was a huge deal. And there were always rumors of IHG acquiring maybe Wyndham, but that was everyone talked about doing like NYU conferences in the past. That never happened. So who knows what’ll be. I mean, I think obviously there’s people on both sides of the aisle who have their either support of it or not. It’s a lot of the Asian American Hotel Owners Association, which is a membership organization, that represents some 20,000, they have like 20,000 members. Their owners own 60% of the hotels in the US, and a lot of them are in that Wyndham and Choice kind of midscale economy segment. Now, if those two, if Choice acquires Wyndham, -and that was one of the issues, that was that Steven Holmes and Jeff Bellotti brought up, the CEO- could that even pass the get through the FTC reasons.

Robin Trimingham: Right.

David Eisen: Because a monopoly of economy hotels out there and having such power. So who even knows if that a deal like that would get through. So we’ll see.

Robin Trimingham: Yeah, it’s interesting time. I was reading about the lodging conference that just took place in September. Everybody there seemed to have been talking about the golden age of travel. So, despite all this swirling economic uncertainty, what do you think? Is this the golden age of travel or where are we?

David Eisen: When I think of the golden age of travel, I think it is almost like something in the in the halcyon years of the past. I hear golden age of travel and I see Pan Am up there in those seats where like these big seats and they were in the dining car came through and they were cutting off prime rib and ha

Robin Trimingham:. A full a meal with wine.

David Eisen: Yeah, a full meal, having a cigarette afterwards. And this was a normal economy seat. This is like that’s how I envision the golden age of travel. And as we do know now, that doesn’t exist anymore, at least in the airlines. Or unless you’re ponying up 20 grand to sit in, sit in first. Yeah. So just from the numbers, I mean Expedia, they delivered their earnings today. Travel demand is still breaking records. People are traveling whether this is a hangover from Covid, I don’t know. Now leisure travel is booming. It’s still really is. People are on the road. The whole bleisure idea. I think it still has steam because I think people are now that a lot of people, we were talking about this work remote, they can still work but be in a different country, being in a different state, which means they need to stay somewhere, so they need accommodations to do so. Corporate travel on the transient side is definitely not back. If you listen to the Peter Kern from Expedia was talking about on CNBC this morning, that it hasn’t reached back to pre-COVID levels.

Robin Trimingham: I’m going to push back on that one a tiny bit, because I was reading this morning that American Lodging Association survey says business travel is making the fastest recovery this year of all sectors.

David Eisen: It might be making a recovery, and I don’t know if they’re talking about group or they’re talking about just the transient traveler or the one off, maybe it is, certainly is coming back. I’m just not so sure it’s coming back the same as robustly or in the same way it was before Covid. We all hope it does. I don’t think it’s back to 2019.

Robin Trimingham: No it’s not, it’s not to 2019. But it seems to be like on the rise generally.

David Eisen: I think everything is on has to be on the rise because we came from the nadir. Everything’s going to go up from here now. Well, I will say that conferences are certainly back. The ones I’ve attended are back to where they were. They’re still getting a record breaking numbers. So I think a lot of people are like, ‘I want to get back’. It’s not even getting about the road. They want to meet face to face again like it’s, instead of, it’s great seeing you, Robin, over through a screen, but it’d be great to be in Bermuda with you, wearing some Bermuda khakis and enjoying a round of polo. I don’t know.

Robin Trimingham: Doing his interview on the terrace with the ocean in the background.

David Eisen: Yeah, I mean, at the Fairmont in Bermuda or whatever the property is there. So conferences are back. Everything’s changing. I think when you look at commercial real estate, you look at the office segment. Offices are trying to get converted into multifamily, in apartments, right? Into residential. So if people aren’t going back to the office, it’s a whole different dynamic. And a lot of this spills over into travel. There’s the opportunity of taking a lot of these spaces. And I think the entire downtown corridors, the great cities across America, are going to be going through this transformation. They used to be a locus of commerce and business, and I think a lot of these cities are going to go through this rebirth where it’s like instead of that, it’s going to be more about a cultural shift, these cities becoming places where people live. There’s the big diaspora into the suburbs. Now, people are going to come back to the cities, but because these cities are going to be changed to places where you want to have a family and you want to raise a family there. Things are changing at a velocity, and I think a lot of it has to do with coming out of Covid and the reshuffling of the deck. And a lot of that will be how we use and how we integrate with space.

Robin Trimingham: Yeah, I think you’re right. I mean, we do seem to be at the nexus of this really big shift, not just in how we work, but in how we live. I don’t know about you, but the generation that I was raised in, I mean, everybody had a single family home.

David Eisen: Good luck trying to buy one now. I mean, interest rates.

Robin Trimingham: A half million.

David Eisen: That. Yeah, that’s the thing though. It’s like you look at, I mean, interest rates are high. So that’s one strike against you. Plus, everything is too darn expensive anyway for like if you want to -and I don’t like doing the whole cohorts millennials I mean I’m a gen I don’t own a home-. It’s come up with 20% on a $500,000 home. That’s a big nut to save up for when you look at like the cost of living everywhere elsewhere. So yeah, home ownership, I think, when my parents were coming up, it was something that was really within not easy grasp, but easier to comprehend to buy a home. You could buy a home for like $100,000, $150,000. Now you see homes out there, especially if they’re in A locations, it’s millions of dollars. So it’s expensive to do that. And when it’s that expensive to do and it’s more harder to finance and get 30 year mortgage wherever it is 15 year mortgage, it makes you rethink the way we live.

Robin Trimingham: Everything is really in the midst of getting rethought because like, how much space do individuals need, do families need? Is it more important to be able to have and drive a big car in this age of energy crisis and sustainability? Or is it more important to be able to walk to work? You know.

David Eisen: I think all these are all very salient points. If you look at the multifamily space, especially. I live in Bethesda, Maryland. Every apartment building that is a new build apartment building or a conversion or something else, the spaces are getting smaller and smaller. People are living in smaller spaces. I mean, listen, go to Asia. I mean, they look at Hong Kong, places like that, and you know what I’m talking about. But I do find it interesting. It’s just sometimes you’re driving along, you see these huge houses and it’s like, is a football team living there? No, it’s probably like four people and like, they need that much space? Why? Anyway. So things are becoming more compact depending on where you live I guess.

Robin Trimingham: So, in all of this, do you see specific regions or markets where you think there’s significant shift going on within the hotel industry as we look towards 2024?

David Eisen: Good question. I mean, well, there’s the focus. Obviously everything was depleted. I go back to Covid, it’d be great if we didn’t have to talk about Covid anymore, just like no one was talking about the Spanish flu in 2018 and that was 100 years prior. So maybe that’s going to take a century before no one is going to be talking about Covid anymore. But I’ll be long gone by then. So I think downtowns are all they’re going through a renaissance like we talked about before. But I think a lot of the new brands that are coming out, a lot of the new development is coming in these tertiary markets, secondary, tertiary markets. Where I live, it’s like we’re a suburb of DC, but things are getting more and more urban as you go farther and farther out. Now you have these rings around these cities, and it’s like a town I never would have gone to growing up. Now it’s like this cool area and people are moving out there, and maybe that and that’s what it was. People go where people are migrating to and that’s where development should go to. So it’s like if a town is seeing growth there, that’s the development community follows these trends and builds there.

David Eisen: And then I think brands are getting put out that serve those markets. So I couldn’t tell you exactly where it is. I mean, we saw markets boom right during Covid and post Covid even people are still traveling, but they were going to resort areas and things like that away from the cities. I still think there’s going to be this reshuffling of the deck and how we look for integrate with space and things like that. And I think there will be these markets that we never thought would be anything, but they just they look at like Long Island City in New York, Queens. I mean, Long Island City was like a desolate place. But from a location standpoint, you’re right across the river from Manhattan, and it’s booming now as it is, and farther stretches of Brooklyn and Queens and wherever it is, it’s like those are going through these. That’s another topic, gentrification, which is a whole other issue as it is. But yeah, I think there’s still reshuffling the deck in the post-Covid era, and we’ll see where it all sets out.

Robin Trimingham: I like your urban Renaissance references, and maybe next time we chat, we’ll have to dive a little deeper into that and see how all of this is evolving.

David Eisen: Yeah, you’ll see stuff like a razing of a dilapidated building and replenishing it, or with just green space, those kind of things. Interesting to see what cities will look like 20 years, 30 years from now, if they’re the same kind of just these hulking buildings or a place where people really are not just going there to work because that’s not what’s going on anymore. And they’re not going they’re not doing the 9-5, get on the subway, go downtown, hop back on the subway, go back out to your home in the suburbs. It’s like there’s going to be a real shift out there, and that’s where people are going to be living. So how do you repurpose everything in that regard?

Robin Trimingham: David, always interesting to chat with you. Thank you so much. You’ve been watching The Innovative Hotelier. Join us again soon for more up to the minute insights and information specifically for the hotel and hospitality industry. You’ve been listening to The Innovative Hotelier podcast by HOTELS magazine. Join us again soon for more conversations with hospitality industry-thought leaders.