. Looking Ahead to 2020: Don't Fear a Slowdown | Northstar Meetings Group

Looking Ahead to 2020: Don't Fear a Slowdown

The hospitality business is strong enough to weather a downturn, says Michael Dominguez.

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The Driskill Hotel, host of NMG's Destination Texas event

The hotel industry has been riding a wave of unprecedented success, Michael Dominguez, president and CEO of Associated Luxury Hotels International, reminded attendees at Northstar Meetings Group's Destination Texas event today. Addressing the crowd at the Driskill Hotel, a Hyatt Unbound property in Austin, he pointed out that even a projected softening of the market doesn't mean business is bad. 

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Michael Dominguez, president and CEO of Associated Luxury Hotels International, speaking at NMG's Destination Texas event

"We are in the largest expansion in the hospitality industry in history," Dominguez told the rapt crowd of 39 meeting planners and representatives from 35 suppliers such as the Driskill, Visit Irving, Visit San Antonio, Grapevine's Great Wolf Lodge, and Galveston's Moody Gardens Hotel, Spa and Convention Center. "We've all been hearing about a slowdown; but it's a slowdown in the rate of growth. We're not growing at the same rate, but it does not mean we are going backwards."

Hoteliers in many markets are able to score higher rates from transient travelers, Dominguez noted, which is adding friction during meetings negotiations. And this is affecting the cities that are hosting the most events. Nashville, for instance, has fallen out of STR's top 10 destinations for meetings, Dominguez said, because demand is causing it to be priced like a first-tier city rather than a second-tier one. Austin has come in to take that place in the top 10.

An interesting shift also has taken place in hospitality that nobody is talking about enough, he added. "Demand has outstripped supply over the past 10 years, and this applies to all segments," Dominguez said. "There is new supply coming into the market. But we're building hotels to fill a transient demand cycle." And those new hotels tend to be short on meetings space; 72 percent of hotels that have been built in the recent four to five years have been limited service, where organizations are now sending more business travelers. "From 2010 to 2015 we weren't building ballrooms," he said, adding that while many convention centers are expanding, bringing more meeting space into the marketplace, corporations don't always want to meet there. If convention centers could get their F&B up to par, he said, they would start to fill that void.

Some other areas Dominguez thinks the meetings industry should keep an eye on include:

  • Host organizations are demanding more and more local and sustainable F&B, but organic foods bring food-borne illnesses. "The rate of outbreaks has skyrocketed," he said. "Some day there's going to be an outbreak and we're going to be ground zero. Are you prepared from a communications standpoint to deal with that?"
  • Planners need to consider other types of outbreaks and epidemics, too. For example, the current measles outbreak is the largest in the United States in 30 years. Are you ready when your event becomes ground zero?
  • Airline fares are creeping up because more people are flying and there are fewer seats, some of which is attributable to Boeing's difficulties with the 737 Max aircraft. Carriers that relied heavily on the Max do not have extra planes to call into service.

When the inevitable downturn comes, which Dominguez does not think will happen in 2020, the hospitality industry is in a better place to weather it than ever before. "Occupancy rates remain elevated," he said. "If we slipped like we did in 2009, we'd still be up 3 percent. I love the historical perspective: Yes, year-over-year is going to matter, but with the general environment of the industry, we're going to be OK because we've never been higher. We're setting records everywhere we go."