The hotel industry is in a unique circumstance of arguably being in the midst of an upswing at the same time as the broader economy nears the onset of a recession.
Speaking during the “A View from the Top” panel at the 2022 Lodging Conference, Apple Hospitality REIT CEO Justin Knight said he’s never had to talk through both occurrences with investors at once before.
“This is the first time in 25 years that I’m talking about a recovery and recession at the same time,” he said. “I think we have incredibly interesting dynamics for our industry right now, because we are, I think, on the margin continuing to see recovery in our business despite the fact that when you look at the macro numbers for the overall economy there are some troubling areas.”
Aimbridge President and CEO Michael Deitemeyer said the thing that gives him pause as he thinks about a possible recession is how leisure demand has had an outsize impact on the ongoing demand recovery, and it’s unclear just how sustainable that will be if business travel continues to lag.
“When I think about the economic news, it’s really the sentiment change and what does that do to business travel coming back,” he said.
Deitemeyer said the early signs haven’t lived up to hoteliers’ hopes.
“Business travel is coming back much slower,” he said. “I was optimistic that post-Labor Day it would happen, and it really hasn’t tipped at all. … I’m cautiously optimistic that we push through this with leisure continuing to help the pace. Even though it’s softened a little bit, it’s still ahead of what it was in 2019.”
Arash Azarbarzin, CEO of Highgate, said he still hopes the economic recession will be short and shallow, but that’s not necessarily what he’s expecting.