The Real Deal New York

Can a weakening dollar save US hotels from Trump slump?

Jonathan Tisch warns of “lost decade” for tourism
By Konrad Putzier | June 05, 2017 03:40PM

From left: Park Hyatt at One57, Expedia’s Dara Khosrowshahi and Jonathan Tisch (Credit: Park Hyatt and Expedia)

President Trump’s proposed travel bans on citizens of certain Muslim-majority nations has caused plenty of concern among hoteliers. But some hospitality CEOs argue that currency fluctuations still have a greater impact on U.S. tourism.

“U.S. volumes were hurt a little bit by the strong dollar, but now that the dollar is getting weaker, that should be a tailwind for the demand coming in,” said Dara Khosrowshahi, CEO of travel booking site Expedia.

Speaking at the 2017 NYU International Hospitality Industry Investment Conference, he noted that while Trump’s speeches and policies hurt travel to the U.S. from Mexico and the Middle East, it’s the dollar that speaks loudest.

Jonathan Tisch, CEO of Loews Hotels, said he noticed an “anecdotal impact” of Trump’s policies and statements — which include the proposed travel ban, increased vetting of tourists, and public spats with the governments of Mexico, Germany, China and Australia (among others) — on foreign travel to the U.S.

In a keynote speech earlier Monday, Tisch warned that these policies could lead to a “lost decade” for U.S. tourism, similar to the years after 9/11.

“Ending this 10-year slump required a united industry effort to push for pro-travel policies,” Tisch said, according to a summary sent to reporters. “We learned some valuable lessons that we need to put into action again today.”

Tisch’s comments come after Marriott International CEO Arne Sorenson called the proposed travel ban “not good, period” for hotels in April, and Empire State Realty Trust CEO Anthony Malkin also warned of a potential “PR bruise” for the U.S.

Despite an uncertain outlook for the tourism sector and concerns of oversupply in Manhattan, the panelists claimed demand for hotel properties is still strong.

“I think the whole hyperfocus on where we are in the cycle is a little bit overdone,” said Mark Hoplamazian, CEO of Hyatt Hotels. “For the people that really matter to the marketplace,” a property’s long-term outlook is still more important than the prospect of a quick flip, he added.

Hyatt explored a potential sale of its hotel in the Midtown luxury tower One57 last year.

Sebastien Bazin, CEO of AccorHotels, said investor interest is “extremely linked” to interest rates and that low bond yields continue to push institutional capital into the hotel sector.

The flipside of continued demand for hotel properties is that is has become hard to compete. Tisch claimed “assets for sale are priced for perfection” and that Loews is not looking to buy properties at the moment. Constructing new hotels, however, still remains appealing, he said.

(To view more Manhattan hotels, including information on their building size, filing dates and more, click here)