CEOs weigh in on today’s top issues at ALIS

LOS ANGELES — Some of the top hotel executives in the world ran through a gamut of today’s hottest issues at a panel that kicked off the first day of the Americas Lodging Investment Summit (ALIS) by Northstar.

The “Boardroom Outlook: Roadmap for the Future” panel included Geoff Ballotti, president and CEO of Wyndham Hotels & Resorts; Anthony Capuano, president and CEO of Marriott International; Elie Maalouf, CEO of IHG Hotels & Resorts, Jean-Jacques Morin, deputy CEO of Accor; Chris Nassetta, president & CEO of Hilton and Craig Smith, CEO of Aimbridge. It was moderated by Jeff Weinstein, editor in chief of Hotel Investment Today by Northstar.

Weinstein asked the panel various questions about the potential impact of the new Trump administration. Nassetta said while immigration and mass deportations are dominating the news right now, he’s optimistic that it could eventually lead to a more comprehensive solution and immigration reform.

“This is provocative, but I believe it to be true. Right now, the focus is on the border and closing the border, and stopping illegal immigration,” he said. “What we ought to be focused on, once that stuff has been dealt with, we may have a once-in-a-generation opportunity for this administration to get comprehensive immigration reform done… To be able to help some of the workforce challenges that we’ve had.”

Nassetta admits there will be a lot of noise for some time, but it could lead to a solution for a long-simmering problem.

“If that window opens, as an industry, we should be really working together to try and finally come up with a sensible, comprehensive solution,” he said.

Future development

When asked about future interest rate cuts, Capuano said he thinks the issue goes deeper than that.

“[The biggest issue isn’t] interest rates. It’s not construction costs… It’s the availability of debt for new construction,” he said. “All of us sit here with pipelines, with dozens, if not hundreds, of shovel-ready projects.”

Capuano said those projects aren’t paused because of the interest-rate environment or even elevated construction costs.

“It’s just that there’s not that free flow of debt — for existing assets, yes — but for new construction. It’s still a bit constricted,” he said. “To me, that’s where the administration can help us in a meaningful way. Interest rates are going to go up and down, and our collective partners will navigate that, but we have to get debt capital for new construction flowing into the system.”

Maalouf said he started the year by touring Europe, Shanghai, Tokyo, Hong Kong and Singapore, and talked to a number of financial institutions, investors and big funds. He also said he spent the end of 2024 in the Middle East with the big sovereign funds and he noted a commonality. 

“Almost to a group. They all want to reduce their investment exposure to Europe… and they want to increase it into the U.S. and in real estate,” he said. “They want to decrease their exposure to office and retail and increase it into hotels.”

Maalouf said those investors couldn’t find those deals in the past few years, but he thinks they eventually will.

“There’s a lot of money and lot of equity that wants to find its way into U.S. hotel real estate, at the right prices, at the right value,” he said. “I don’t think that’s just one year shift. This is a pretty structural shift of people saying they’re underinvested in the U.S. real estate.”

Outside of the U.S., where Accor does most of its business, Morin said he see plenty of capital available, too.

“If you look at the Middle East and if you look at Asia… there is a lot of money… and these people are making major investments,” he said. “Just to give a balanced view of the rest of the world, we see very significant development all over Asia, notably Southeast Asia, and the Middle East has been booming since COVID.”

When the panel was asked about the current M&A market and lack of hotel acquisition activity in 2024, Ballotti said he was optimistic that there would be more activity in 2025. He has a clear vision of where he thinks the buyers are.

“In our business, it’s the small business owners that have just been so far away from the expectation on price,” he said. “Every owner we have wants another unit and as the interest environment eases and that gap shrinks, our small business owners believe that there’s never been a better time to break ground on that next asset, in terms of the cycle that they believe is really just beginning. That last cycle went for 11 years; we’re in the second or third year. It’s a great time to buy another asset.”

Third-party management consolidation

When asked about further consolidation in third-party management, Smith said he’s thinks it will continue to happen.

“You’re going to see more consolidation in our space and you’re beginning to see more sophistication,” he said. “As the large brand companies move away from the space, it’s opening up doors for a lot of folks to come back and say, ‘Can we put a couple companies together? How can we sophisticate? How can we how can we use our scale to do what’s right?’”

Smith said he’s bullish about the space, not just for his company but also for his competitors.

“There’s a wide-open place for you in the United States and even more so overseas,” he said. “Most of the big brand companies overseas, where they had kept it a managed [assets], are looking at it now and saying we’re going to do the same thing in the United States.

“Overseas, where there’s only four or five international players in the third-party management space, I hope we’ll see more of us in the future there because there’s a lot of opportunity,” he said. “When our team traveled to Dubai and then to Singapore, they said it was like going back 20 years to questions that they’re getting about the third-party space. There’s a hunger out there and it’s still in its infancy.”