Editor’s Note: Connecting the Dots is a series of monthly conversations with Michael Dominguez, President and CEO of Associated Luxury Hotels International. The series examines issues in the global economy in 2024 that will “connect the dots” to be helpful not only in business but in life as well. This installment is moderated by Ashly Balding, Executive Vice President & Chief Sales Officer at ALHI.
Ashly Balding: Are you still bullish about our industry, especially meetings and events?
Michael Dominguez: I am known to be overly optimistic at times, but I'm still very bullish on our industry. The growth that we've seen in our industry so far is coming from group, it's not coming from leisure anymore. So that's telling me we have a lot of health in the industry. The fact that corporate earnings -- almost 80% companies reported higher than their guidance, which means corporate earnings are still strong. I always look at the CEO Confidence Index through the Chief Executive; it's still really positive. You don't see CEOs looking at the world in a very negative way. I always say how you feel is how you behave and if I feel good about the world, I'm going to continue to invest, and I’m going to continue to move forward. I also think there's an underlying piece that people have missed, but we've had over 1,400 CEOs change in the Fortune top 5000. The reason that matters: when you have a new CEO, what's the first thing that happens? I have to build culture, I have to get everyone together and you know how we do that? Bring people together. There's no better way to do that. You can't do that through Zoom. That's a really good tone for us as an industry to know you've got a lot of new leaders. Think about the earth-shattering discussion where the CEO from Chipotle went to Starbucks. You don't think he's going to bring the Starbucks leaders together and try to get this momentum going and trying to figure it out?
And you don't think whoever takes over at Chipotle is going to bring people together? That's the piece that’s kind of missing and that's why I'm bullish. I don't see a recession around the corner for us for one reason -- every recession has had one commonality: massive unemployment. We don't have that. Yes, unemployment has gone up, but we're not running much higher than our 28-year running average, which means we’re right there where we've always been. People forget, economically speaking, you have to have 4% unemployment to be at full employment because if everybody has a job, how do you grow? So, 4% has always been that metric. We have forgotten that for a long time because we've been at it, but that's why we've had a tight labor market, because we don't have a lot of extra people. There's always 4% of people, for a variety of reasons, they're unemployed.
Balding: Expand on that a little bit more. How are the labor markets and our industry doing?
Dominguez: The labor markets are doing pretty well. What I do look at and again, here's where it's bifurcated – it’s the word of the year, seriously. But what I do think is interesting is it's split and it's encouraging because you can look at the latest jobs report we beat the estimates. But if you look at it, healthcare, not a surprise, has been the number one driver of jobs. It’s going to be. We’re an aging economy. Healthcare is not going away. That's going to continue to lead the cycle. The thing that I think people are missing, kind of in the data, is transportation was up. Then you also look at construction was up, so that means we're building and we're moving, and if we're moving, we're moving materials, we're moving product. That gives me a lot of encouragement back to my other statement of why I'm bullish about our economy and our industry because if you look at the signs and where we're actually building, we're building up in the right spot. Tech is one of the biggest leaders right now in layoffs and you're seeing that. I also think that is a normalization and an adjustment to AI because, and it's not that AI is doing the work for them, they're starting to build different products. You're going to have different needs. There are product lines they're probably retiring because of where they're headed with investment. That's going to create some of this opportunity. I did read a stat somewhere, and tech specifically was the smallest as far as the time they're out of work, if they lose a job because we have so many startups in the tech world that are looking for talent. It’s not that people aren't going to find a job, these people are looking for that kind of talent and they're getting it pretty quickly. That's why I'm pretty optimistic. We're in a really, really good place overall. As our industry, when I look at the hotel industry, we are right now in CBRE’s latest report, we had 15.3 jobs open per hotel in the United States. Pre-pandemic, it was 14.8. We’re there. I know people say, ‘look, I got jobs I can't fill.’ We had jobs we couldn't fill before the pandemic. I'm just worried that we've gone back to the pandemic level of labor. We’re there.
Balding: Love that. Thank you for connecting the dots. Your perspective is always valuable.
Dominguez: Thank you for the conversation. I appreciate it. Thank you all.