On Jan. 1, 2024, Kevin Jacobs, chief financial officer and president, global development for Hilton, began his tenure as 2024 AHLA board chair, succeeding Leslie Hale in the position. Jacobs has been involved with AHLA since 2019, when he helped restructure the organization’s revenue model, and he became a member of AHLA’s Executive Committee in 2020. His participation in the association has also included service as secretary/treasurer in 2022 and vice chair in 2023. Jacobs recently spoke with LODGING on his goal of helping AHLA build on last year’s successes while continuing to bring its Strategic Plan to fruition, particularly in regard to protecting the franchise model, improving the availability of labor, and enhancing diversity within the U.S. hotel industry. Jacobs also offered his outlook on 2024 travel trends and insights on the current hotel financing and development environment, drawing on expertise from a nearly 16-year career with Hilton.
What initially attracted you to the hospitality industry?
I often say that I’m an accidental hotelier. I went to Cornell University to study engineering and did that for a little bit. Then I decided I wanted to study business instead. And the Nolan School of Hotel Administration is one of a couple of undergraduate business programs at Cornell University. So, I was intrigued by the idea of not only studying business but also having a career in hospitality. I was fortunate enough to get accepted to the school and ended up completing my undergraduate degree in hospitality management, and I’ve been in the industry ever since. I’ve stayed because I love the fact that we do a lot of good in the world through travel and tourism, as well as contributing about 10 percent of the world’s GDP and roughly one in 10 jobs globally. And then I love the people; I love doing business with the same people year after year and going to conferences year after year. Many of the people that I’ve worked with over time have become lifelong friends. So, I really feel like this industry is my home.
Can you relate some of your most rewarding experiences working with AHLA?
In 2019, I was asked to co-chair Project Ascent along with Justin Knight, who was chair before Leslie Hale. We worked with AHLA stakeholders to revamp our revenue model, and more specifically, our dues model. Over the course of 2021 and 2022, we revamped the long-term Strategic Plan of AHLA, and I was one of the members of that task force. I think we now have a great Strategic Plan that covers the primary areas of Labor, Workforce, Alternative Accommodations, and Stakeholder Stewardship. Labor is about influencing and working with elected bodies to meet the challenges that we’ve had on the labor front. Workforce is about improving pathways for people to find employment in our industry, driving awareness and growth of upskilling programs, and ensuring that DEI [diversity, equity, and inclusion] is woven throughout so that we are attracting a very diverse workforce over time. Alternative Accommodations is about making sure we get equitable treatment under the law for similar lodging businesses. And Stakeholder Stewardship is about our DEI initiatives, sustainable practices in the industry, and all our efforts around preventing human trafficking.
What is your perspective on Leslie Hale’s accomplishments as 2023 chair?
Leslie’s overseen an amazingly productive year for AHLA. We’ve continued to grow our staff, and the revenue is as high as it’s ever been. The more revenue and the more staff members we have, the more we can expand our reach and deliver on our advocacy priorities. So, we’ve accomplished a lot this year on the advocacy front, and I think Leslie has helped AHLA expand its role as a thought leader and an event provider in the industry. We had our inaugural Hospitality Show last year in Las Vegas, which was a huge success. We’ve expanded the number of on-the-road events to about 20 in 2024. And we’ve really grown the ForWard events, which are about advancing women in hospitality. So, I think Leslie and the team at the association have done a great job of upping our game in many areas.
What are your goals as 2024 AHLA board chair?
I’m looking forward to furthering our advocacy agenda on behalf of our 30,000+ members and all our constituents in the industry. I’m also looking forward to supporting the work that the AHLA Foundation does around the workforce and DEI, which is a personal passion of mine. I really believe that our industry is an engine of opportunity. Our industry is full of stories of people starting out at the line level in hotels and rising to become corporate executives. For example, I started behind the front desk at a hotel; that was my first job in the hospitality industry. And beyond that you have example after example of people who have been able to find employment in our business, and it’s changed their lives and the lives of their families.
In addition, I intend to do everything I can to help address the threats to the franchise model, which is something that we as an association and an industry need to focus on. The franchise model has been incredibly successful and has created a lot of opportunity for many small-business owners around the country, and we need to protect and defend that model. The National Labor Relations Board published a new rule regarding the joint-employer standard, and if it goes into effect, it will have significant impacts on the hotel industry and increase labor complexities for franchisees across the industry. It poses a threat to the franchise business model.
What other challenges do you see going into 2024?
Although we’re very close to being back to pre-pandemic levels of employment in the industry and we’ve done a good job of hiring people back, we’re still not where we need to be. Across the country, there are 8.7 million job openings but only 6.5 million unemployed people to fill them, according to the Bureau of Labor Statistics. That’s obviously broader than just our industry, but we are feeling the effect in our industry. And so, we would like to work with Congress to continue to expand the H-2B temporary worker program to help fill open jobs and allow returning workers to be exempt from the cap. Ultimately, we’d like to see other reforms to the immigration system. I know it’s really difficult in the current political environment to get something done on that front. But we have jobs available, and specifically in our industry, we have jobs that people would want. For example, if all the individuals seeking new opportunities in America were authorized to work, we and other industries would be happy to employ a lot of those people, and that would make a big difference. In terms of messaging campaigns, television ads, videos, etc., I think there’s a lot we can do to promote the industry as an employer. We all compete with each other, but I think that by working together as an industry, and specifically through AHLA, we can help people understand that our industry is a great place to be employed.
Do you believe travel trends will favor hoteliers this year, and will the election year have an impact?
A presidential election year tends to generate a lot of business activity; those campaigns spend a lot of money and they run around the country staying in hotels. This increased activity also occurs in campaigns for House and Senate races. So, presidential election years tend to be positive demand drivers for hotels.
In addition, we think leisure travel will remain strong, and now you have business travel as well. For us at Hilton, third quarter year-over-year growth in business transient demand was the same as leisure. Everybody wrote off business travel during the pandemic, saying it would never come back. But it is nearly back to the level that it was pre-pandemic in terms of absolute demand. And from a revenue perspective, if you factor in the growth in average rate, the business segment is ahead of where it was pre-pandemic. In addition, we think group business will continue to be incredibly strong in 2024 and beyond. Because organizations weren’t able to hold these big association and corporate meetings during COVID, there’s still a lot of pent-up demand for them. And if you think about the work-from-home trend, the more remote your workforce is, the more you need small get-togethers and in-person meetings to talk strategy. Plus, you have people going to a hotel and working remotely on a Friday and then turning it into a long weekend.
During the pandemic, people got caught up in asking whether the change in work behaviors was going to suppress demand for our industry. And it turns out that what you really need for our industry to be successful is economic growth and mobility. Whether people are traveling for work, a meeting, leisure, or some combination of those things, we can accommodate you. So, we think the future is bright in all travel segments.
As a specialist in finance and development, what is your outlook on the 2024 hotel pipeline?
You’re going to have a supply growth environment over the next few years, but it’s going to be constrained because capital and building costs are more expensive. However, while the cost of raw materials and the cost of labor went up 20 percent to 30 percent in 2021 and 2022, they only went up 3 percent to 5 percent in 2023. So, those cost increases are leveling off. Now, your cost of debt is higher, but I think a lot of owners and developers are saying, ‘Look, I’m going to pay more for my construction loan. But I’d rather get the project under construction if I’ve got a site that’s ready to go, it’s entitled, and I can build a hotel on it, rather than keeping that piece of nonproductive property with no cash flow.’ So, that’s why you’re seeing projects still getting started and getting done. For example, our construction at Hilton in 2023 exceeded 2022, even more so in the United States. It’s just that fewer hotels are under construction than there would be if interest rates were lower. And having that constrained supply environment is actually good for fundamentals: the lower levels of capacity additions with continued increases in demand means the fundamentals should be pretty good in the industry.
Can you share any concluding thoughts on your appointment as AHLA board chair?
It’s an incredible honor to be AHLA board chair, and I’m looking forward to helping the association continue to deliver great ROI for our members by advocating for issues that are really important to our industry. I’m not going to personally change the trajectory of AHLA or the great work that we’re doing. Rather, I’m looking to be a good steward of the organization.