As part of the Americas
Lodging Investment Summit’s Patron sponsorship program, ALIS organizers asked
Hilton’s Kevin Jacobs nine timely questions as we prepare for the 22nd
annual event January 23-25, 2023, at the JW Marriott/Ritz-Carlton Los Angeles
L.A. LIVE. Following are his responses.
inflation and the threat of a recession affected the U.S. hotel franchising and
an uneven economic environment, we’re continuing to see growth in our pipeline
and supply around the world. The hospitality industry remains a strong
long-term investment given the broader secular shift to experiences over
materials, resilience to macroeconomic headwinds like inflation, and
undersupply, especially in many international and emerging markets. While we
are seeing, and expect to continue to see, macroeconomic uncertainty, we remain
focused on what we can control to ensure we are delivering on our long-term
growth objectives. Additionally, Hilton continues to command an outsized
percentage of global growth.
forecasts show supply growth checking in at about 1% each year for the next two
or three years. How do you see it playing out based on Hilton’s pipeline?
JACOBS: We continue to see
demand from our guests and interest from developers and owners as we emerge
from the challenges of the past few years. Even through the pandemic, we have maintained
strong net unit growth of more than 5%. This positive trend is a testament to
the strength of Hilton’s network effect, where our brands, commercial engines,
and business model continue to fuel opportunities around the world. As of Q2’22,
we had a robust pipeline, with more than 413,000 rooms planned to join our
global system, and half of these are already under construction. We remain on
track to deliver 5% net unit growth for 2022 and remain confident in our
ability to continue delivering mid-single net unit growth for the next several
years and eventually returning to the 6-7% range we were delivering
ALIS: What’s the message to
hotel owners, investors, and developers from the lending community in general
as 2023 approaches?
JACOBS: While capital is more
expensive right now, the hospitality industry remains a strong investment
choice for the long-term. At Hilton, our business model allows us to lead the
industry in new development signings because owners and developers recognize
the power of industry-leading RevPAR Index premiums and our growing network
across a range of award-winning brands. As we continue to expand our footprint
around the world, it remains a great time to invest with Hilton.
on your portfolio and what you’re seeing throughout the industry, what segments
are the most sought after for development and franchising opportunities? Why?
our portfolio, all 18 of our award-winning brands drive incredibly strong
RevPAR Index premia. Our focused-service and all-suites brands are particularly
well-positioned to capitalize on increasing travel demand across the growing
middle class, making them an especially popular franchising option among owners
and developers. Ultimately, however, we work every day to drive returns for our
ownership and developer partners, delivering a strong value proposition backed
by more than a century-long legacy of Hilton hospitality.
has the labor shortage affected the hotel development process? Is it something
that the industry will deal with long term?
JACOBS: Though we’re seeing
some of our labor issues ease, in the long-term, the industry must be focused
on attracting and retaining the best talent. At Hilton, we’ve worked over the
last 15 years to build an incredibly strong culture so that our team members
feel supported – and in turn provide outstanding hospitality to our guests.
We’ve also invested in partnerships and benefits that enable our team members
to achieve their professional goals, support their personal needs and plan for
their futures. These efforts, coupled with our relationships with owners and
developers and the continued demand for Hilton-branded hotels around the world,
has allowed us to continue building our high-quality pipeline and delivering
additional supply to our eager and loyal guests.
the status of the shortage of materials and the supply-chain issues and their
effect on the hotel industry?
purchasing decisions are made on a hotel-to-hotel basis, at Hilton, we continue
to work with our properties and partners to address the challenges of the
current operating environment. Our procurement experts can leverage the scale,
scope, reach, and expertise of Hilton Supply Management to ensure they have the
flexibility, access, information, and solutions they need to operate and grow
CFOs cite people, money, data, and technology as their four areas of biggest
concern. How do those four topics converge to set corporate agendas in the
JACOBS: First and foremost, we are
a business of people serving people – and one of the most important ways we can
do that is through investing in best-in-class technology. The pandemic allowed
us to accelerate a lot of the critical work already underway to enhance the
stay experience with digital touchpoints, including contactless check-in and
out, automated upgrades, Confirmed Connecting Room, and Digital Key. Our guests
can also customize their stays through the Hilton app, which helps give us data
and insights to identify how else we can address the ever-changing demands of
our guests. Investing in these technologies also allows our hotel Team Members
to focus on what they do best: providing our guests with our signature Hilton
hospitality. Ultimately, I truly believe that if you focus on the people, using
data and technology to do so, the company will be better positioned over the
ALIS: What’s the most under-estimated challenge the
hotel industry faces, and why?
seen record demand as travel has recovered across all areas of our business
this year. As we welcome more guests following the impacts of the pandemic, we
have to be incredibly focused on their experiences with us.
are eager to see the world and feel taken care of after the last few years, and
we must continue to deliver for them.
ALIS: What’s the most under-estimated opportunity for
the hotel industry, and why?
world is a big place, and the major brand companies have a tremendous opportunity
to develop in up-and-coming destinations. At Hilton, our goal is to be able to
provide our guests with reliable and friendly experiences anywhere they want to
be in the world, for any stay occasion. As we continue to build our portfolio, filling
key gaps across segments in primary markets and expanding into secondary and
tertiary markets will be critical in allowing us to do just that.