Despite the sticker shock some travelers may feel when booking a hotel these days, the industry’s top bosses say it’s not just the world’s wealthy booking stays.
Hilton CEO Christopher Nassetta, Hyatt CEO Mark Hoplamazian, Accor CEO Sébastien Bazin, and IHG Hotels & Resorts CEO Elie Maalouf took the stage this week at the NYU International Hospitality Investment Forum and spent the better part of an hour making the case that the multi-year K-shaped recovery narrative is finally flattening.
Since Hilton’s first quarter earnings call, Nassetta has been pushing the C-shape economy, where the high end keeps humming while the middle-class segments finally start catching up. Yes, AI investment is part of the story, but the Hilton CEO also pointed to infrastructure projects from legislation passed years ago that are only now generating the kind of construction activity that puts the middle class back in the game.
“What I think we're feeling now is the result of that working its way to the economy that requires the middle class to get in the game, and these non-residential fixed investment numbers are picking up,” Nassetta said. “My guess is you'll continue to see those pick up, and that means good things for all of us in this industry.”
Nassetta also noted that nearly 70 percent of Hilton's U.S. bookings are now drive-to, up from about a third pre-Covid — not necessarily proof that the middle-income traveler is thriving, but proof that they haven't stopped moving.
“The middle class is much bigger than people think,” Maalouf added. “Sixty percent of households are exposed on stocks and over 60% on their home. As long as the stock market keeps going up and as long as home prices keep increasing, even if you're not getting those increases in your paycheck, you're feeling wealthy or feeling better.”
Hoplamazian flagged the one cloud on the otherwise sunny macro picture: The structural damage to oil and gas supply chains from the Iran conflict could take six to nine months to unwind from their volatile price hikes, and elevated energy costs are a risk to the guests that are just beginning to find their financial footing.
“It takes time, and these elevated oil and gas prices are going to affect the customer base that is now starting to show signs of life,” Hoplamazian said.
But there’s always room for further economic opportunity.
Bazin, fresh from last week’s announcement that he plans to step down from Accor by spring of 2028, called on economic reforms in Europe, describing the continent as “by and large a subsidized economy” that operates in a structural corridor roughly two and a half points wide in either direction on economic growth or contraction.
“We're going to end up minus two, minus two-and-a-half percent GDP growth, even if [the rest of the world] crashes,” he said. “And if anything goes super well, we're going to be up two and a half percent [when everyone else is at] 5%.”
The candid hotelier called on more infrastructure investment and more willingness to shake things up.
“We need more leadership. We need to have a vision. We need to plan. We need to be audacious,” Bazin said. “We need to shake out the board in Europe. Can we go to a 5% or 6% growth? We need to invest in infrastructure. We need to invest in the real economy. We need to invest in the IT system.”
While one might think that signals a shift to politics for Europe’s top hotel boss, Bazin addressed his retirement. He was quick to clarify he is not stepping down from the industry, with a laugh that suggested he has a next chapter in mind.
“I’m stepping down from Accor. I’m not stepping down from the industry. I could be replacing that guy,” he jokingly said with a laugh toward Nassetta.