Hyatt Hotels CEO and President Mark Hoplamazian speaks with Yahoo Finance's Brian Sozzi about demand in the leisure and business travel sector as the hotel industry deals with labor shortages.
- Welcome back to Yahoo Finance Live. The US has lifted a 19 month COVID related travel ban for international visitors. Let's see what this means to the hotel industry's outlook. Joining us now is Hyatt CEO Mark Hoplamazian. Mark, good to talk to you as always here. What does it mean to the hotel industry? Have you picked up-- have you noticed an uptick in bookings today?
MARK HOPLAMAZIAN: Absolutely, this is a momentous day, reopening the borders for vaccinated travelers is a really great step to take forward and re-engage. The day that we-- November 8th date was announced, we saw an instantaneous surge in bookings. By the way, for this week, this week was up 50% overnight in terms of bookings. And it just demonstrates what we've seen in virtually every segment of our industry, which is there's tremendous pent up demand for people to get back on the road.
- That's a huge gain, Mark. I mean, do you think you can continue at those levels right into year end as this pent up demand gets released?
MARK HOPLAMAZIAN: Well, the profile of the demand has really been leisure driven. So as we look into the end of the year, right now, the very end of the year that is the holiday week, or thereabouts, the last 10 days of December are tracking well over 20% ahead of pre-pandemic levels. Hawaii is almost 30% ahead. And our resorts in the Caribbean and Mexico are also 30% ahead.
And as we even as we look into January and February, we're seeing booking rates that are running 20% ahead of where they were pre-pandemic. So it's really been a leisure story. We just completed the acquisition of the Apple Leisure group, which has doubled our resort representation around the world.
And so we're thrilled about the timing of this, because people are flocking to Mexico, and the Caribbean, but also to Europe. We have expanded our property count in Europe by 60% with this new acquisition. And we're right in the middle of it. It Is a resort management business. So it is really in the center of what is going to be a continued durable return to travel for leisure customers.
- Mental note, I'm just looking at the photos here, Mark. I need to go on one of those pools very soon. It's been a long 19 months for me. Look, I'm hearing from a lot of folks in this industry that the weekends are outperforming Monday through Friday. Are you seeing that as well?
MARK HOPLAMAZIAN: No question about it, we've seen that dynamic apply for, really, this entire year. It's been much more weekend dominated. What I would say, however, is we hit a low point at the very end of August, beginning of September in business in bookings and also business travel. From that date forward, every week that's gone by, we've seen an improvement in business travel and group travel, that is meetings.
So even as leisure continues to lead the way, and we are now, as I described a minute ago, getting back to pre-pandemic levels and even above that, the business side of the travel public is coming back now. And we're sort of operating somewhere between 40% and 50% of pre-pandemic levels. But the bookings for 2022 look very good for meetings. So I think corporations are going to be convening again. Associations, significant demand for associations to get back together and have their big meetings again.
So we believe that this is going to be a continued positive progression of demand for both business transient travel and for groups. And I think as you and I were talking a bit ago about getting back to office is another key driver of that business transient travel.
- So you think the road warrior executive, that's coming back.
MARK HOPLAMAZIAN: They're coming back. They're coming back already. And I'll tell you, it's very interesting, there's a human reality of reconnecting with colleagues, with customers, with people that you're doing business with. And the same sentiment that we're experiencing and seeing among our leisure customers, who are thrilled to be able to be back together with family and friends, and be in an environment in which they can actually take a big breath and relax after 19 very long months, so too is that same dynamic true in business.
People are really feeling fulfilled. They're feeling energized by it. And frankly, many of the professional services firms that are our biggest customers, they find it a necessity to get people back and reconnect it to the firm, when during this period of time most people are living in this kind of existence and it's not healthy for their cultures.
- Mark, Hyatt has thousands-- you talked a little bit about this on the earnings call, thousands of open positions across the country? Why are you having so much difficulty filling these positions? That's a large number.
MARK HOPLAMAZIAN: Yeah, this is actually an issue across the economy. There are a lot of-- the total economy is down several million jobs from pre-pandemic levels. And it's a dynamic that people are still studying. We have not reached anything that looks like an equilibrium between open positions and people filling those open positions. And people have constantly looked at the supply and demand dynamics impact on pricing, meaning wage rates. And wage rates are up significantly, especially in markets, where you've seen a surge in leisure travel.
So places like Florida, and Texas, and Southern California are seeing 20-plus percent increases in wage rates. And at the same time, they're are still open positions. And so there's a dynamic that's taken hold. And I think it's multiple dimensions. Some people have left the workforce. Others have made other selections in terms of how they want to spend their time and spend their work lives. So it's going to take a while to actually settle out.
And so I believe that sometime during the first half of 2022, we'll start to see a more stabilized supply and demand dynamic, maybe a new equilibrium established. But right now, the shortages are persisting. And it's true in our industry, it's true in the restaurant industry, it's true in actually many industries where you've got a lot of frontline workers who are making different choices at this point than they were pre-pandemic.
- If you can't get them back, Mark, for a wage increase of 15% to 20%, how do you get workers into your system? Are you looking at a new-- you have to come up with a new model of how you deal with employees?
MARK HOPLAMAZIAN: Well, let me just say that we, historically, have enjoyed having a dedicated group of people who are in our industry. And they stayed in our industry for a very long period of time. And the unfortunate reality is because of the near 100% drop in demand last March and April, there were a lot of people who were furloughed or terminated from their positions.
And, you know, as they think about coming back, they're thinking about other alternatives. But that also means that there are people in retail or in logistics and distribution, who wouldn't have otherwise been targets for us as an industry that we are now reaching out to. And I have to say, there's a tremendous level of camaraderie, and a sense of family, and also a sense of purpose in our business.
And I think that's ultimately what's going to drive people to recognize and reconnect with what it feels like to actually being contributing-- being a contributing team member to creating an environment, where people are fulfilled, they feel safe and secure in a hotel environment. And they are having a great human experience. So I think, ultimately, that's going to be the key to getting people to recognize the joys of being in the hospitality.
- True story here, Mark, I stayed at a hotel about a month ago. Wasn't a Hyatt now, so no worries there. But there was no housekeeping. So I inquired about why didn't they come in there and change my sheets, et cetera like they normally do. The folks told me, they couldn't get housekeeping. And this is, I think, a debate really being talked about in the industry, the state of housekeeping. Are you moving to an on demand model for housekeeping?
MARK HOPLAMAZIAN: Well, some months ago, actually, went to an opt in model. We asked our guests to let us know if they want a daily housekeeping service, because we were not able to really provide daily housekeeping for all of our guests every day. And now, we also started to implement that policy during COVID. Under CDC guidelines and also based on customer preferences, we reduce the level of contact in people's rooms purposely.
And so we have a refresh program while you're staying in for multiple nights, new towels, and collecting trash, and things like that. And that is what we've been working on. But if someone has requested a full service during their stay, we will schedule that and provide it. But we are short staffed and that's true across the whole industry. I think people are also guests.
It's interesting if you advise people ahead of time, the grace and understanding that you get in return is pretty remarkable. If you surprise them, if they came in expecting daily housekeeping service, that's a problem. And so we've been spending a lot of time being deliberate about the communications.
I personally have evolved to a point where I actually prefer not having daily housekeeping. Refresh is fine. A new towel is fine. But I don't require it. And I don't choose to take it. And I think a lot of people are making those choices at this point. But in truth, we're short staffed. And we will get back to a more robust level of service that we can deliver, even if some of our guests continue to choose not to have daily housekeeping.
- Well, let the record show, I'm always in the market for some new fluffy towels when I do stay at a hotel. But good luck this holiday season. Hyatt CEO Mark Hoplamazian, we'll talk to you.