Latest / Suite Spot: A Hotel Marketing Podcast / 159 – Check-In with AHLA
Transcript
- Ryan Embree: Welcome to Suite Spot, where hoteliers check in, and we check out what's trending in hotel marketing. I'm your host, Ryan Embree. Hello everyone. Welcome to another episode of the Suite Spot. This is your host, Ryan Embree. As you can see, we are here with another industry check-in with AHLA. And we have a first time guest with us Chirag Shah, Executive Vice President, Federal and Political Affairs & Council at the American Hotel and Lodging Association. Chirag, thank you so much for joining me on the Suite Spot today. Chirag Shah: Absolutely. Thanks Ryan. Appreciate you having me. Ryan Embree: Well, welcome to the Suite Spot. This is your first time. Before we get rolling, talk about some of the topics that AHLA and issues that AHLA is obviously advocating so ferociously for hotels all around the country. Maybe give us a little bit of background, your journey to AHLA and give our Suite Spot audience, just a brief glimpse of the role that you do there. Chirag Shah: I appreciate it. So I've been in the lodging industry, lobbying on behalf of hotels and hoteliers for about a decade and some change, 12-13 years. And previously my background is actually as a campaign and elections attorney. It's what my training is, and not perhaps a skill that folks are, a ton of folks are always looking for especially when you get relatives that want help getting outta a speeding ticket or something. But I spent time on Capitol Hill, worked on a number of political campaigns, and 2012, 2013 after finishing up my last campaign, got a call from a group. They were looking to open a DC office. And when I was on Capitol Hill, I used to meet with them quite frequently, and it was a group called AAHOA And, uh, they were looking to, to open their DC office. And it was great because I, uh, literally spoke the language that many hoteliers speak and, and figuratively spoke the language, of Washington DC. And so, uh, it, it was a, it was a great fit. And I came in and opened their DC shop and worked there for, for eight years. And, uh, then came over to AHLA and has been fantastic to represent a lot of the same people physically, actually the same people, but also the industry. It's such a wonderful industry where hotels, everybody loves going to hotels. Most public officials don't fully understand what the hotel industry is all about, but they love talking about their travel experiences. And so now at AHLA, I get to oversee the federal affairs shop, the political shop where we meet with members of Congress, have got one of the greatest jobs where we tell the story of the lodging industry to members of Congress, their staff, the presidential administration, every single day. And so getting time to understand what the challenges are that hotel leaders are facing, where the industry is going, what the economic footprint is, that's what we do. And so it's been a lot of fun. Ryan Embree: You know it's funny, Chirag, we have so many industry leaders on this podcast, and we talk to them about their kind of beginnings and they talk about maybe jumping from brand to brand and still having that tight-knit family. Because it all comes back to hospitality. It seems like a very similar path with you and the associations, right, starting with the AAHOA and then transitioning to AHLA. But at the very end of the day, it's all about hospitality and the hotels that you're advocating for from those small, independent hotels all the way up to the major brands. And here we are at the Q1, beginning of, 2025. Great time to reflect on, years past and recognize some of those key and many accomplishments that AHLA really prioritizes. You put out a kind of a 2024 year in review. What are some of those big wins that kind of stand out to you Chirag from this past year? Chirag Shah: You mentioned it, it really is a small world. Like I grew up, uh, in the industry, uh, learned a lot from Mitch Patel in, in Chattanooga with Vision Hospitality. And now he's the chair of AHLA and so really coming full circle. But I learned a lot about the impact of these particular issues with him and with other hoteliers. But over the last couple of years, last year in particular was an interesting year, challenging year, uh, federally because, uh, not only did you have a very thin margin with the majorities in Congress, but you also had a divided government with the Presidential administration, Democrats running the Senate, Republicans and majority of the House, and of course, the Biden administration, but it was also an election year. And so the, the vitriol of the acrimony sort of came to a fever pitch. And so trying to get things done was particularly difficult. But, uh, really proud of what we've been able to do on behalf of hoteliers. Even in an environment like that, looking where perhaps the most significant impact came in the labor and workforce space, uh, where because of some of the challenges, and you and your, your listeners may recall perhaps not so fondly, but recall the, the phrase joint employer or joint employer liability. This is a, a legal doctrine where the pendulum continues to swing back and forth from administration to administration. But ultimately, it is a illegal principle that tries to identify who is actually the employer for liability purposes, as well as for collective bargaining purposes and dating back to the Obama administration. And then the first Trump administration, Biden, this, the standard kept swinging back and forth, and ultimately they came up with this idea that would try to make it more difficult to identify who was the true employer for hotels and other franchise businesses among other type of businesses. And over the years, we've had a number of members in the lodging industry testify before Congress on this issue. And when they broadened the definition to create more of an uncertainty in who was actually the employer, we sued the National Labor Relations Board to overturn that rule. And last year we were ultimately successful, worked with a number of other business organizations in DC, suing the National Labor Relations Board. And not only did they reverse the rule, they went back to the traditional standards. So now we know that a joint employer or any employer is someone who has direct and immediate control over the employment conditions, which really helps hoteliers to identify their lane and know what the legal standard is. Similarly, we worked with business coalition partners also in the labor workforce space. There was an attempt to create a new overtime threshold for the white collar exemption for the administrative exemption. The intent was to increase that exemption from 35,500 to almost a 60-65% increase, in a very short amount of time, which would've taken place and gone into effect on January 1st of this year. AHLA has long been supportive and the industry long supports appropriate compensation, particularly for those that are working overtime. But this was just too much, too fast. And that was one of the, the biggest challenges that we had. It also didn't take into consideration some of the, uh, regional implications for our industry. There is a dramatic difference in the labor market between Manhattan, Kansas, for instance, and Manhattan, New York. And that was something that we shared with the Department of Labor, as well as these automatic escalators that the rule would have put into place every three years, irrespective of market forces. And so again with a group of coalition here in DC, a team member of ours, Kat Fonda, ran that coalition. We successfully sued the Department of Labor, and they reverted back to the previous rules. So those were, were two areas because of the tight majorities in Congress, we ended up having to work through the legal system to, to make sure that our interests were heard, but other things as well. The federal per diem rate, working with the Biden administration to increase the federal per diem rate, not only on lodging, but also on on meals and incidentals. It's about a hundred million dollars benefit to the industry in the workforce space. We continue to see a huge challenge. Hoteliers are telling us every single day, there's just a gap they need to have. We have over 200,000 fewer employees than we did in 2019, a hundred thousand open jobs right now. And to be able to supplement those jobs with seasonal workers, we were able to increase the cap on H-2B Visas as double that number. Uh, and then finally, there's a large discussion on, so-called junk fees or resort fees. And hotels were kind of caught up in this larger discussion, but we've been long prioritizing, leveling the playing field and all in pricing fee display. And we were able to get the Federal Trade Commission to understand our position and ultimately pass a rule that was consistent with that for the entire lodging ecosystem to have the same policy of all in pricing upfront. So a lot of key wins, even at the top. Ryan Embree: Massive wins there Chirag. And to be honest with you, you and your team have been doing a great effort because each one of those topics and subjects that you talked about were certainly talked about and risen key people talking about them in the public's limelight. We just saw that report, 65 percent of hotels still reporting staffing shortages right now. So anything that we can do to alleviate that, getting creative, the industry has done so much over the past couple years to try to get creative on the individual owner side. But anything that AHLA is advocating for to help with that certainly will help our industry as a whole as we turn to 2025. You know, I'd love to get some background insight because here you are, you know, our industry is so great, but there's no shortage in sometimes issues that we come across with it. How do you and your team kind of go about which issues you should tackle, prioritizing your time to make sure that some of those, uh, those bigger issues are, are brought to the forefront? Chirag Shah: So we have a wonderful industry and folks do not have a shyness to share with us their opinions on what is affecting them, affecting their bottom line. So, a lot of great ways that we're able to reach and meet withour members. And AHLA represents the entire swath of the industry, every segment from hotel owners and franchisees to management companies to brands to partner state associations, vendors and partners, and everybody in between big, medium and small portfolios. And so wanting to make sure that we represent everybody within that larger picture is a key priority for us. And we meet, certainly starting with our executive committee and our board of directors that represents each one of those segments. And then we have what is functionally our government affairs committee, which we refer to as our advocacy cabinet. We meet once a month, and for about the latter six months of the year, five months of the year, we look down the road to see, well, if this were to happen, and in last year's case, it was, if the election were to go this way, or if the election were to go that way, what do we anticipate will be the key issues the industry should focus on? And so we, we do a lot of focus grouping and vetting of our primary issues, but also looking at what is gonna be the economic impact that those issues will have on the bottom line for hotels across the country. What does that mean for our workforce? What does it mean for our guests and our associates? So with that, we, we looked at this year and said, well, uh, what are the political realities as well? And once president Trump was reelected, once the Republicans gained a trifecta in the house of the Senate, we knew which way our priorities were gonna go. Some of it was baked just by the calendar as well. At the end of, or in 2017, Congress passed the Tax Cuts and Jobs Act, and in order to make the budget numbers work, many of those provisions were set to expire at the end of 2025. And so if those provisions do not, if they're not extended or if Congress doesn't renew them, then hoteliers could see anywhere between a 30 to 45, 50% tax hike just by doing nothing. And that is a huge concern that we have. And so working with congressional leaders, on a process, which I won't bore you with, dealing with budget reconciliation, but making sure that our voices are heard to extend those key provisions, whether it's areas in the real estate space, like hind exchange, making sure that no one's trying to take that away or try to use that to pay for something else. Making sure that we allow for bonus depreciation or a hundred percent bonus depreciation to encourage capital investments at our hotel properties, as well as the small business deduction, section 199 A of the tax code, which, provides for a 20% deduction for small businesses. These are all economic drivers. They're job creators, they're engines of the economy. And so we're constantly meeting with members of Congress to ensure that they understand what this means for hoteliers. So working with our various groups, that's how that's informed. There are a few other issues as well, but tax four and a half trillion dollars worth of tax priorities coming out at the gates, key priority for us. Ryan Embree: And I think it's so important to hear that background, to know kind of what if scenarios and all the data that is making and causing these informed decisions that you and your team are advocating for. And also to show the fallout sometimes of whether something is material or something fails. So, how can Suite Spot listeners, or maybe this is a hotel listener, you mentioned it before, and I think it's so important also to see that it's just not hotel owners. It's every aspect of hospitality that AHLA kind of listens to as well as a advocates for, how can any Suite Spot listener get involved to support advocacy and the work that AHLA is doing? Chirag Shah: Absolutely. There's, there's a couple of different ways. One is going to hotelsact.org and signing up to receive our information, going to ahla.com and, checking out all the, the news that we're putting out as well as receiving our newsletter, hotel lobby. We put this out once a week and we're informing our members of those key priorities that affect our industry. And so staying up to date in those ways is important. But also then taking action from time to time we will ask folks to take action to send a letter to your public official. A lot of times those letters have the, the basis already drafted, so you can take a look and say, I understand this, and you can make changes. But ultimately those letters go directly to your public officials that represent you. And hoteliers have such an outsized voice. Not only are you voters, but you're also those folks that employ others. And so your, your voice has a great deal of influence. And so that is one way. One of the other things that we do, and by all means would, would love to get in touch with anyone interested in this, is why we do these, what we call Heart of the House tours. And the best way for a public official to understand our business, because most of them don't fully appreciate the hotel industry, because while they may know the local restaurateur because because they frequent those restaurants, they're not generally staying at hotels in their own communities. They're traveling elsewhere, and they're going to those hotels. And so to build a relationship with those folks that represent you, whether it's at the State House in the city council or in Congress, that's something that we can help to facilitate as well. And so walking them through your hotel, walking 'em through your business model to say, this is what our business is all about. It's actually the owner that owns the real estate. It's the operating company or the management company that employees the employees. And this is the footprint, it's the brand company that sets the standards. And that's why you have the consistent experience from one place to the other. And once folks actually walk through a hotel property and understand it personally, now that informs their decision making when they have issues in front of them whether it's in Congress or at City Hall. Ryan Embree: No, that's a great point. And I think you're right, it gives a different perspective. 'cause at the end of the day, Chirag, we're all travelers at heart. We've all been to a hotel, but to understand the uniqueness of the hospitality industry, if you haven't been a part of it before, it's very different. It's very different from from other industries. So getting, I think that's a brilliant idea that you and your team help and facilitate hoteliers to do, to get a better understanding everything that goes in play. And we saw that firsthand at the hospitality show. Both you and I had the pleasure of attending in San Antonio back at the end of 2024. Big trending topic relationship between ownership and management and where that stands today. Lemme get kind of your thoughts as we wrap up here, just with like current state of the industry, what you think it with that ownership management relationship. Chirag Shah: Yeah, you know, the, the area that I think, and I refer a lot of folks, if folks are interested in delving deep into some of the numbers as well, is AHLA puts out our state of the industry report every year. And we just did that in January. And it identifies key trends. And I think the best one that I like to look at is that there's been a shift towards normalization, as well as a new climate of stability. I think that's gonna be helpful. We look at some of the data and we're still not fully recovered, to mention some of the workforce information. We're still not fully recovered, from the pandemic, but we are also reaching and meeting new challenges as well. And so the trajectory will consistently be a challenge between owners and the challenges they face as well as management companies and the challenges they face, just to reach back to where we were. And so optimistic with some of the key data points, looking here at guest spending, we're gonna hit another record high, which is always positive. We're looking at about $777 billion in 2025. Occupancy will hold at just north of 63%, which is just shy of the record at 66% in 2019. And ADR will take up slightly to 162, which is just above the record set last year at 159. And so those trends, keeping a degree of stability, I think bodes really well for the ownership and management relationship. A degree of stability is particularly helpful there. And that will hopefully, continue on throughout this year as we will hopefully see some stimulus in the economy as well based on the tax policy that we discussed. So, stability and normalization, I think are, are two key words there. Ryan Embree: Yeah, no, absolutely. I think you hear those numbers, our hotel audience gets really excited, but it's also about managing and operating efficiently and effectively to make sure bottom line works, for you as well. So a lot of factors there. Chirag, certainly impacting hoteliers and hotel owners today. As we wrap up, what I love about AHLA, you mentioned it before, it's got a really close ear to the ground as far as hotelier sentiment out there. You have the hospitality show, regional events that you're out there, you're shaking hands, you're talking to hoteliers every day. What do you think the general outlook you would say for our industry is over the next, let's say six months? Chirag Shah: No, I think that's, that's great. I think folks are generally positive about where things are because of some of these patterns that we discussed, the normalization and a degree of stability looking forward to this year. There wasn't initially, at the beginning of the year, thoughts that there'd be significant shocks to the industry and perhaps some optimism as well with the idea that there may be a shot in the arm with certain tax policies coming out of DC. I will say that, at the same time, there is this idea of stability and while revenue continues to increase, costs are increasing at twice the pace of revenues. And so those are definitely challenges. We're watching very closely what some of the activity is out of Washington, DC, what the executive orders are from this administration, and where they may have impact on our industry. A lot of it, while there's all these sensational headlines that are coming out, we're watching to make sure that the reality actually meets the headline as well. So if there are no significant shocks, I think there the optimism will continue, but it sort of is a wait and see approach, especially as a new administration settles in and certain global forces are taking to account as well. Ryan Embree: Cautious optimism indeed ,Chirag, we appreciate all of the work that you and your team over there are at AHLA are doing for all of our hotel and hotel owners across the country. Chirag Shah: No, appreciate that. And I'll throw one last thing out at you. Is that our CEO Rosanna Mayada is doing a fantastic job. She'll be testifying for the house Educational Workforce Committee on Wednesday. And so we'll continue to drive this discussion about the importance of our industry with the highest levels of government. So, hopefully your members will be able to tune in on that as well. But very grateful for the time today and looking forward to hearing from you again down the road. Ryan Embree: Well, we appreciate the time. Thank you so much for joining the Suite Spot. And thank you to our audience. We'll talk to you next time. To join our loyalty program. Be sure to subscribe and give us a five-star rating on iTunes. Suite Spot is produced by Travel Media Group. Our editor is Brandon Bell with Cover Art by Bary Gordon. I'm your host Ryan Embree, and we hope you enjoyed your stay.