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The State of the Lodging Industry in 2014

The State of the Lodging Industry in 2014

fitzpatrickthumbJohn Fitzpatrick, 2014 AH&LA Chair and President and CEO of the Fitzpatrick Hotel Group

Lodging: How is 2014 looking for the Fitzpatrick Hotel Group?

Fitzpatrick: It’s all about rate this year. The market is very strong, especially in New York, and occupancy has been high for the last couple of years. Now it’s about getting the ADR back to where it should be. People say New York rates are expensive but if you compare them to the rates in London, you’d fall off your chair, so I think New York is still a good value.

Lodging: Are you concerned with all the new hotels being built in New York?

Fitzpatrick: Yeah, there are another 20,000 hotel rooms coming online over the next two years. But New York has always been like that. We always absorb the extra supply. It’s amazing how quickly people’s memories change because five or six years ago hotels weren’t sexy and now they are, which is why everyone wants to get back into them. So there is definitely going to be a saturation point out there.

I am worried a bit about the illegal hotel situation going on—there are over 40,000 rooms [apartments and such] in New York City alone that are not up to code. Look, we have no problem with Airbnb and everyone swapping their apartments—that sort of thing has been going on for years—but when people take 20 or 30 apartments and basically run a mini-hotel, then they need to operate them on the same level playing field and have the same requirements as the rest of us. That means, for instance, that they need to use the same fire and safety codes, and they need to pay the same taxes that a hotel does.

Lodging: Do you ever worry about the high taxes on hotel rooms in New York?

Fitzpatrick: Unfortunately, hotels seem to get hit first when it comes to taxes, and that’s because it’s revenue from people who aren’t living in the city. Raising hotel taxes won’t affect the politicians’ votes. In New York, we just had a room tax that was supposed to sunset last November, but the new mayor has to make his budget so the tax has been extended for two years. Look, we’re happy to support the new mayor, but we still want this to eventually go away, because putting extra taxes on our hotel rooms just makes it more expensive for corporations and events managers to do a convention, conference, or meeting in our city. Every dollar that goes on that room makes it more difficult for us to compete with the hotels in other cities.

Lodging: Do you think being an independent hotel owner changes your approach to your new AH&LA duties?

Fitzpatrick: A bit, because I look at the issues as an owner and operator would. So, for me, the business is still about looking after people. This is a very personal industry and we need to make sure we keep it that way. Running a hotel today is so different than it was 30 years ago. Now it’s so much about the numbers because big investment companies now own so many properties. All that is important, but we always have to remember that it’s our guests that are paying those bills. That’s why, no matter where I’ve owned a hotel, I’ve insisted that my general manager’s office is right off the lobby. It can’t be up on the sixth floor because that’s where you get bogged down with paperwork and accountants coming after you.

Lodging: Given your immigrant experience, do you feel like you have a personal connection in pushing our government to improve the visa process?

Fitzpatrick: I was lucky enough to get a Morrison Visa back in the early days and come into this great country. Though when I first emigrated from Ireland, I felt like I was in no man’s land—I couldn’t vote here or in Ireland. And my card said I was a ‘legal alien,’ which really put me off. When I received my citizenship, it was great to get my passport and be able to vote. Now when I see other people having issues I understand how much we need to push this issue. The government needs to realize that these people aren’t going anywhere. Also, because I have an Irish hotel I like to have some Irish in here and every year it gets harder and harder to bring them over and get temporary visas. And yet we need them and their foreign experience. So we need to keep fighting to fix this.

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