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Hotel brand executives are identifying growth opportunities in data center development and tax-free states, despite economic challenges. Industry leaders from major hotel chains like Hilton, Wyndham, and IHG are optimistic about future momentum, focusing on infrastructure investments and strategic locations to drive demand and expansion.
In a period characterized by economic uncertainty and high costs, hotel brand development executives are actively seeking growth opportunities. Despite the challenges, industry leaders from prominent hotel chains such as Hilton, Wyndham Hotels & Resorts, IHG Hotels & Resorts, Hyatt Hotels Corp., and Choice Hotels International are optimistic about the future. They are focusing on strategic areas like data center development and tax-free states to drive momentum and expansion.
Momentum Amidst Challenges
The term “momentum” was frequently used by development executives during a panel discussion at the recent Lodging Conference. Dan Hansen, head of development in the Americas for Hyatt, emphasized that the hotel industry is overcoming barriers such as high interest rates, political uncertainties, and tariffs. David Pepper, chief development officer for Choice Hotels International, noted that while some economic predictions have been delayed, there is renewed momentum with anticipated interest rate cuts and reduced construction costs.
Strategic Growth Opportunities
Hotel executives are identifying specific U.S. markets that present significant growth potential. Amit Sripathi from Wyndham highlighted the interest in areas with data center and infrastructure development, particularly in suburban regions. Such developments, including chip factories and AI data centers, alter market dynamics and create new demand drivers. Hilton’s Christian Charnaux pointed out that non-residential fixed investments, such as those in data centers and energy infrastructure, historically correlate with increased room-night demand.
Focus on Tax-Free States and Border Regions
Tax-free states, which do not collect state income taxes, are seen as attractive locations for hotel development. David Pepper mentioned states like Tennessee, Texas, and Florida as prime examples where factories are being built and populations are increasing. Additionally, there is a notable demand surge in U.S. border regions, particularly in southern Texas, Arizona, and California. This trend is further supported by the increased domestic travel in Canada, leading to significant revenue growth for hotels in Canadian provinces.
Outlook and Confidence
Despite the complexities of the past year, hotel executives are looking ahead with increased confidence. Kevin Schramm from IHG emphasized the importance of recognizing opportunities in markets like Austin and Nashville, which offer long-term sustainability despite current challenges. The industry is moving away from traditional cyclical thinking, focusing instead on strategic timing and gut instincts to drive future investments.
Resilience and Future Prospects
The resilience of the hotel industry is a key theme among executives. Amit Sripathi highlighted the importance of stabilizing fundamentals and the anticipated decline in interest rates as factors that will boost owner confidence. Christian Charnaux from Hilton underscored the industry’s ability to absorb shocks and maintain relative performance, suggesting a positive trajectory for the coming years, barring any unforeseen events.
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