Hoteliers at Davos World Economic Forum, Just Trump, Marriott’s Sorenson and IHG’s Keith Barr?

Date: January 2018

Location: Davos, Switzerland

Who Was There: To start with one Donald Trump, Hotelier I guess and President of the USA, I guess…. Mr Trump, wearing his Presidential hat kicked off with America’s role on the global stage. “America first does not mean America alone,” he said. “When the United States grows, so does the world.”

The statement had meaning for tourism-related businesses in the U.S. While worldwide travel numbers are booming, inbound numbers to the U.S. are on a decline—a worrisome statistic for hoteliers.

While an estimated 1.2 billion global trips were taken last year, up about 7 percent over 2016, of the top 15 countries in the world, only two have seen travel dips: Turkey and the U.S. The Trump administration’s travel ban, notably, is blamed by some as having a deleterious impact on inbound travel to the U.S.

Marriott International CEO Arne Sorenson reiterated those numbers during his stop in Davos, but bemoaned the state of inbound U.S. travel, which is down between 4 percent and 5 percent. “We are losing share,” he said.

According to a recent study from the U.S. Travel Association, tourism outperformed overall U.S. export growth during the prior five years. The industry generated an $87-billion trade surplus in 2016, without which the U.S. trade deficit that year would have been 17-percent higher. “For our country to have any hope of closing the trade gap, international inbound travel must perform,” U.S. Travel Association president and CEO Roger Dow said in a statement earlier this month.

“After almost a decade-and-a-half of relatively sustained post-9/11 recovery, since 2015 there’s been evidence that the country has gotten complacent with the policies needed to support this vital economic engine and job creator.”

A potential cause of the downturn could be the perceived “friendliness” of the U.S. toward international visitors, Sorenson warned. “Words around immigration, or words around some of these other issues, can be interpreted in the rest of the world as words of welcome or relatively less welcome,” he said.

Calling this a “golden age of travel,” Hilton CEO Chris Nassetta told Bloomberg that international tourism could hit 2 billion people by 2025. While the U.S. has profited from that growth, he said, he also noted the downturn in inbound numbers.

While some of the decline could be credited to the growing strength of the dollar compared to other currencies, he said, the travel bans haven’t helped. “It’s sort of a convergence of events, he said. “A bunch of us in the industry are trying to help get coordinated with the administration to make sure that the people who want to come to America, who want to do no harm—which is the vast majority of the people who want to come to America—we let them understand that we want them, that they’re welcome.”

International travellers to the U.S. spent 3.3-percent less through November of 2017 than at the same point the previous year, according to the November International Trade report, released Friday by the Commerce Department’s Bureau of Economic Analysis. The drop translates to losses of $4.6 billion spent in the U.S. economy and 40,000 jobs.

“Flourishing international travel is vital to President Trump’s economic goal of sustained 3- percent GDP growth, and the Visit U.S. coalition is being founded for the express purpose of helping him achieve it,” said Dow. “Our guiding principle is that we can have strong national security and still welcome legitimate international visitors. We can do both—and, in fact, without effective security there can be no travel, as we witnessed after September 11, 2001.”

During the first half of last year, Nassetta estimated, travelers who didn’t come to the U.S. cost the country’s economy $2.7 billion. “Double that for the full year; it’s probably a $5-billion issue,” he said. “And if you translate that into jobs, it’s tens of thousands of jobs.”

And at some level, Nassetta said, he believes the administration cares about improving those numbers, but they may be too focused on safety and security to see the bigger picture. “What I would say to the administration, and what I have said—and they’ve listened—is that you can do both,” he said. “In today’s world, with the use of technology—digital identities, biometrics—there’s an ability to have much better security by sharing information between countries and… make it easier for people to come to America and to focus the energies on those people who are looking to cause trouble.”

The Rebuttal: Not everyone is buying it. The right-leaning Washington Examiner rebuked Sorenson’s comments, saying that they ring “completely hollow” and noting Marriott’s recent difficult week in China, after it referred to Tibet, Macao, Hong Kong and Taiwan as independent countries in an emailed survey. “Marriott always makes sure to leave the light on for Chinese communists,” the author wrote. “Offending the regime in any way, as the episode demonstrates, would hurt their bottom line. Trashing Trump, on the other hand, is hardly risky.”

After today’s speech, Dow praised the sentiment in a statement: “We’ve been urging the president to proclaim America open for business, and we’re very encouraged that he did so on the world stage in Davos.

Robust international inbound travel is part and parcel of capturing the vast economic benefit of engaging with the rest of the word. Travel, after all, is the front door to economic development: the president’s goals for foreign investment will necessarily begin with someone taking a trip here. We urge the president to issue bold travel and tourism goals to help restore American competitiveness in the global travel market, which will be a critical boost toward his goal of sustained 3-percent economic growth.”

THPT Comment: Journalists from Germany’s Blick magazine complained that the cost of Donald Trump’s favourite meal was subject to a hefty WEF surcharge at the Davos InterContinental:

The Cola light costs nine francs during the forum – normally there are six. Blick arrives at the hotel lobby on Thursday morning, two hours before Donald Trump arrives, and looks at the menu: a club sandwich costs 42 instead of a normal 27 francs. That’s a plus of 56 percent.

A leaf salad costs 18 instead of normal 13 francs – plus 38 percent. And the Intercontinental Burger with bacon and Bergäkse, the Trump treats itself perhaps to the Coke, 58 instead of 37 francs. An increase of 57 percent. Guess what journalists, room rates and the like rise at times of high occupancy around the world, not just in Davos….Ask the Mayor of Venice, Italy.

Getting there wasn’t cheap either both in terms of cost and carbon – Adam Twidell, chief executive of private jet booking service PrivateFly, said he expected there to be more than 1,700 private jet flights into or out of nearby airports – the highest number ever. A flight to Zurich from London costs about £10,500, and a 40-minute helicopter ride to Davos costs another £3,750.

While the WEF event brings in €40m to the local economy, some residents complain that the growing size of the event is putting too much strain on resources.

Reto Branschi, chief executive of tourism body Destination Davos, said: “It is difficult to have all the construction work, but on the other hand WEF gives us a huge media presence and economic impact. More than 80% of residents voted in favour of having the WEF in a poll last year.”

And according to a Sunday Times (UK) interview in March 2018, Keith Barr, newish CEO at IHG was there, but seems to also have been tied up in worrying as to who was staying the InterConti in Davos.

Addition Comment: The Guardian (UK)

The town’s plushest hotel, The Belvedere, is preparing for its biggest week of the year.

There is not a single available hotel room left in town, despite prices of up to five figures a night for rooms that cost a little more than €100 last week. Many locals have rented out their chalets and apartments for thousands.

Trump’s late decision to attend has prompted extra problems: “The US delegation rang this morning asking for more rooms,” said Tina Heide, general manager of the Grandhotel Belvedere, the fanciest hotel in Davos. “They’ll be lucky to find anything … They might be able to rent trailers in the car park.”

The hotel will be patrolled by some of the more than 5,000 Swiss troops drafted in to secure the town next week. “Security is paramount,” she said. “But so is our guests’ comfort.” To that end, the hotel has drafted in 200 extra chambermaids, waiters and cocktail waitresses who will have to share rooms.

More than a dozen heads of state will be staying at the hotel, together with “a lot of celebrities and other VVIPs,” she said. The WEF has block-booked the hotel, allocating rooms and informing the hotel who is staying on a daily basis to ensure maximum security. “Heads of state can be staying in a suite or a regular single room. They don’t care as long as they get to stay here, as it is close to everything.”

First Seen: Hotel Management

Follow Up:

A few days later Trump’s State of the Union address got the attention of two of America’s lodging industry’s largest organisations, the American Hotel & Lodging Association and the Asian American Hotel Owners Association.

Katherine Lugar, CEO of the AH&LA, which has more than 24,000 members. Not unexpectedly, it focused primarily on the economy: job growth and tax cuts.

“Tonight, President Trump laid out his agenda to seek continued job creation and economic growth,” the statement started off. “The hotel industry has been one of the key drivers of economic growth, supporting 8 million jobs and generating $1.1 trillion in annual economic activity. With three out of every five hotels considered a small business, the hotel industry is especially focused on policies that encourage business growth and empower our nation’s entrepreneurs. The President touted the passage of the Tax Cuts and Jobs Act, which AHLA supported and we believe will spark economic growth.”

The lodging industry is a success story, and is also a small-business success story. Many of the 54,000-plus hotels in the U.S. are owned and operated by small-business entrepreneurs, many of whom are members of the Asian American Hotel Owners Association or AAHOA, which has nearly 18,000 members.

AAHOA said “President Trump’s speech serves as yet another reminder of the great things our nation can accomplish when we work together.” Its statement, briefer than AH&LA’s, was equally supportive of the President’s message and agenda. “President Trump’s speech serves as yet another reminder of the great things our nation can accomplish when we work together,” wrote Chip Rogers, AAHOA’s CEO.

“Whether it’s allowing more Americans to keep more of their hard-earned money, investing in and redeveloping our roads, airports and other infrastructure, promoting the United States as a destination for the best and the brightest the world has to offer, and fixing an immigration system in crisis, we are united by common goals that will grow our economy and strengthen our nation.”

Roger’s mention of promotion of the U.S. as a destination, however, appears to be inconsistent with the Trump administration’s messaging and policies that include a travel ban, which affects residents of six majority-Muslim countries: Syria, Chad, Iran, Libya, Somalia and Yemen. The Supreme Court has said it will rule on the controversial travel ban by late June.

The travel ban has been taken to task by many hotel CEOs, and was presumably responsible for the formation of the Visit U.S. Coalition, whose aim, somewhat counter-intuitively, is “to partner with the Trump administration to reverse the decline in U.S. competitiveness for international travel dollars.”

Lugar’s statement also tackled the dip in U.S. inbound travel, and while most of her response championed the Trump agenda, she did ring the alarm on the travel-decrease dilemma. “As we look at our domestic economy and future job creation, the decline in international travel to the United States causes real concern.

Travel and tourism is our country’s second-largest export. Even though international travel is expanding around the globe, fewer people are choosing to come to the United States. The decline in international visitors to the U.S. has resulted in $32.2 billion in lost spending by those travelers, and 100,000 fewer American jobs.

We urge the Administration to send a welcoming message to the world and adopt policies that promote international travel to the United States while maintaining our security. Doing so will help our country reach the President’s domestic economic goals.”

Immigration is an incendiary issue impacting the U.S. as a whole and the hotel industry, specifically.

Rogers called the immigration system “in crisis,” while Lugar elaborated: “The hotel industry thrives because our employees are as global as our guests. We thank the President for his commitment to finding a much-needed solution to our nation’s immigration policy. We support a balanced approach to immigration reform that increases our border security while also meeting our workforce needs.

There are several immigration programs that are vital to our industry, which has a large component of international workers. We urge Congress and the White House to find a workable solution to these programs. We also call on Congress and the White House to resolve the Deferred Action for Childhood Arrivals program. Protecting Dreamers is common sense, compassionate and good economic policy. It’s time for Congress to act.”

President Trump’s speech did not address DACA by name.

Tax cuts were a central theme of Trump’s address: “As I promised the American people from this podium 11 months ago, we enacted the biggest tax cuts and reforms in American history. Our massive tax cuts provide tremendous relief for the middle class and small businesses,” he said.

“We are heartened by the prioritisation of small business owners in the recent tax overhaul and are optimistic that the Administration and Congress will continue in this vein to promote free enterprise and champion the avenues to economic success and freedom that make our nation great,” Rogers said.

Hand in hand with taxes was the promise of an infrastructure package. “As we rebuild our industries, it is also time to rebuild our crumbling infrastructure,” Trump said. “I am calling on the Congress to produce a bill that generates at least $1.5 trillion for the new infrastructure investment we need.”

Any investment in infrastructure is a boon for the lodging industry. “We applaud the President’s commitment to further stimulating economic growth by investing in infrastructure,” Lugar noted. “Our industry recognises the importance of infrastructure enhancements to supporting travel and tourism. We look forward to learning more about the plan and working with the Administration and Congress to make this a reality.”

Not everyone was happy with Trump and the AH&LA’s statement. One Twitter responder, @sonofelmer4, wrote: “How can AHLA support a leader who promotes policy and rhetoric blatantly detrimental to the very workforce needed to operate our hotels!”

First Seen: Hotel Management