Hospitality industry won't recover for several years, say hotel executives in New York City

The U.S. lodging industry won't see any significant recovery for several years, though China and India may present opportunities for growth sooner, said senior hospitality executives at a Cornell panel discussion Nov. 9 in New York City on the challenges facing today's hotel industry.

The panel, the fifth session in the Cornell School of Hotel Administration's (SHA) Dean's Leadership Series, was held at the Intercontinental The Barclay Hotel and was the first sold-out crowd for the series. Moderated by SHA Dean Michael D. Johnson, the event attracted more than 250 hospitality industry leaders, 18 corporate sponsors, 18 leading members of the hotel industry press, alumni and others.

"The School of Hotel Administration is in a unique position to pull hospitality leaders together to discuss the business climate today," said Johnson. With customers saving more and spending less, "these are difficult times for our business model, and we're watching it change."

For example, said panelist Bill Carroll, senior lecturer at the SHA, "Customer discount expectations will continue to drive the industry. With less credit and less customer spending, we're in for a long-pull."

"A hotel room that used to be $350 is now $200 in New York City," said panelist Robert McCarthy, group president at the Americas and Global Lodging Services, Marriott International Inc., who oversees Marriott's global brand, a company with more than 3,300 hotels worldwide and 32 million rewards members. "We don't expect to see any new hotel construction until at least 2012," he said.

The hotel industry is a real estate business, said panelist Stephen Haggerty '90, executive vice president of the Hyatt Corp. "As more hotels are unable to pay mortgages, banks are beginning to operate properties within a highly regulated framework."

In addition, capital markets have dried up, he said, and there is little money to build new hotels.

Other panelists included Jeffrey Boyd, J.D. '81, president/CEO of; Paul Brown, a president at the Hilton Hotel Corp.; Bill Glenn, a president at American Express; and Rohit Verma, professor at the SHA.

"We're seeing many of the same issues at our company," said attendee Christine Mahl '99, who works for Starwood Hotels in New York City. "The capital markets are certainly challenging us."

The Dean's Leadership Series was established in 2007 as "a platform for academic and industry leaders to debate the pressing hospitality industry issues of the day." Past sessions of the series in Orlando, Washington, D.C., and New York City have looked at sustainability in the hospitality industry, real estate capital and restaurant profitability. T he next session is scheduled for May 6, 2010, at the Le Méridien Etoile in Paris.

John Mikytuck, SHA '90, is a freelance writer living in New York City.

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