India and China are set to be the “two biggest travel markets in the world long term”, according to Chris Nassetta CEO of Hilton, speaking at the NYU International Hospitality Industry Investment Conference in New York.
Sitting on a stellar panel of industry leaders, Nassetta highlighted the “demographics and rapidly growing middle classes” of both countries, while acknowledging that their economies “will be subject to ups and downs”. He added: “China’s economy might be suffering at the moment, but long-term, it is silly not to recognise how powerful China will be as a travel and tourism destination – it will become the number one outbound market again in the long term. India is going to pick up at a much faster pace – just look at its politics and infrastructure – India is on the move.”
Sébastien Bazin, chairman & CEO, Accor, agreed that China and India were “fundamental markets” but placed a question mark over their profitability in the near term. “It takes six years to open a hotel in India, two in the US and three in Europe,” he noted. Turning to his four peers on the panel, he added: “All of us together – the biggest five hotel operators in the world – probably have fewer than 500 hotels in India. In China, we have more than 25,000 hotels. Can you make a lot of money in both markets? No, but you have to be there to play the outbound market.”
Elie Maalouf, global CEO, IHG Hotels & Resorts, countered by saying that they were actually already profitable markets. “We have been in India for 40 years plus,” he said. “We used to have 70 per cent international and 30 per cent domestic occupancy, but now it’s the inverse and rates are moving up 30 per cent year on year. We place India 15 years behind China - we think it will follow the same trajectory.”
Added Anthony Capuano, president and CEO, Marriott International: “We know that travel is cyclical by nature, but if you look across the longer-term horizons, the numbers are compelling.”
Said Nassetta: “I think we can make money in both markets. We are making money in China. India is harder - we are a lot smaller there – we need to have a lot more vision and look further down the path.” But he predicted that in the longer term all parties on the panel would have “big and profitable businesses” in both countries.
Tourism rebound
Discussing the significant tailwinds driving the hospitality industry, Maalouf said that his first year in the IHG hotseat had inspired positivity. Maalouf was appointed CEO in July 2023 and said that one of his first tasks had been to “go out and explore the business”. He said: “Going round the Middle East, Southeast Asia, Europe, the Americas, I really started to see the rest of the potential we have. The best days are still ahead for this industry.” He added: “Our industry was interrupted during the pandemic because governments forced people to stay at home. But we recovered quickly, GDP continues to grow, populations and the middle classes are growing. It is a cyclical business, but if you are patient as an operator or investor you will always have highs.”
While much of the spotlight has been on the leisure-led recovery, Mark Hoplamazian, CEO, Hyatt also signalled positivity around business travel. “This time last year, leisure travel was off the charts,” he said. “We are still growing in leisure off a very high base, but this year, the big change is business travel. In New York, business travel is up 20 per cent to date – leisure is up 10 per cent. That is staggering. New York is booming – we are all seeing it. Yes, there have been some shifts, but out corporate accounts are up 12 per cent and total business trends are up 6 per cent, so the whole segment is growing for us.” He recounted how Bill Gates sounded the death knell for business travel during the pandemic, forecasting that “50 per cent [would be] gone forever”. Added Hoplamazian: “He got that 100 per cent wrong. Business travel is back and rising steadily.”
Added Bazin: “I was wrong on this panel three years ago - I really thought that business travel would go away by 25 per cent forever.” However, he noted that even if business travel were back, “the mix has changed”.
Capuano underlined a general sense of positivity “listening to the earnings calls” of his peers. He said that even if double digit RevPAR growth was slowing, “continued growth across quality sectors and across geographies is really encouraging”. He concluded: “There is a societal change that started pre-pandemic and accelerated post Covid, and it’s the focus by consumers to invest in experiences.”
Concluded Bazin: “I am bullish in the short term. I am bullish in the medium term, and in the long term.”