Name: How One Investor Is Profiting From Consumers’ Love of Travel
Uploaded: 2025-11-02T11:00:00Z
Duration: 19 min 4 s
Description: Eric Resnick, CEO of private equity investment manager KSL Capital Partners, joins WSJ’s Take On the Week to discuss the strength of leisure travel, the outlook for corporate travel, the challenges of new hotel construction and the rise of the experiential economy.

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Eric Resnick, CEO of private equity investment manager KSL Capital Partners, joins WSJ’s Take On the Week to discuss the strength of leisure travel, the outlook for corporate travel, the challenges of new hotel construction and the rise of the experiential economy. Photo: WSJ

https://m.wsj.net/video/20251030/de849a9e-0aaa-4ca2-87f2-7e6af4fcbac7/1/hls/manifest-hd-wifi.m3u8

Eric Resnick, CEO of private equity investment manager KSL Capital Partners, joins WSJ’s Take On the Week to discuss the strength of leisure travel, the outlook for corporate travel, the challenges of new hotel construction and the rise of the experiential economy.

How One Investor Is Profiting From Consumers’ Love of Travel

Recently pricing power has been a bit reduced, coming outta COVID where we saw a real surge in demand and a surge in pricing. So, the market now is absorbing that over the past couple years. We suspect that you'll see that resume a healthy upward trajectory, not necessarily dramatic, but healthy, over the next year or so.

Hi everyone, I'm Miriam Gottfried and this is WSJ's "Take On The Week." This week we have another batch of earnings coming up, and among them are some big travel and leisure companies like Marriott, Hilton Grand Vacations and Airbnb. Our guest today is somebody who has a lot of insight into that market. We have Eric Resnick, CEO of KSL Capital Partners, which is a private equity firm that invests in travel and leisure. Hi Eric.

Hi Miriam, thanks for having me.

Thanks for being on. Can you give us a quick overview of your strategy and the kinds of assets you like to own?

As you said, we invest exclusively in travel and leisure. We've been doing so for, gosh, over 30 years at this point. We tend to focus on the mass affluent consumer, but you know, our hotel investments, as an example, span select service hotels to some of the world's most exclusive ultra luxury resorts. But the way we look at travel and leisure, about half of it's hospitality industry investing. The other half is split up between various recreation, clubs and real estate businesses. So, think of that as golf courses, health clubs, ski resorts, restaurants, you know, and the like. And we do so globally

Within leisure, there's the divide between sort of the budget traveler and the luxury traveler and the people in between. And then there's also corporate travel. How are each of those segments doing right now, like in this environment?

If you look at corporate versus leisure travel, you know, leisure travel definitely is kind of the, that's the anchor in the travel industry. Leisure travel tends to be very consistent. Corporate travel tends to be a bit more cyclical and I think people sometimes overstate the cyclicality of the industry as a whole because of corporate travel. But importantly, on a global basis, corporate travel is about 20% of total travel demand. Now, what we're seeing now is that corporate travel actually is rebounding quite robustly this year. In fact, our corporate travel demand across our hotels is growing faster this year than our leisure demand. But that's the natural consequence of leisure travel that came back so robustly in '21 and '22 into '23 and corporate travel that really took until about '23 to really get going. So, we're still recapturing some of that previous corporate travel demand, and I think that's why you've seen a bit of an acceleration there.

So, as you look at companies like Marriott or Hilton Grand Vacations or Airbnb, which segments of the market do each of those target and what will you be listening for on their earnings calls?

They're each a bit different. If you look at Marriott, they're of course very global. I think they are, you know, understanding what they're seeing by chain class. So, what are they seeing in their, for RevPAR, you know, the unit of measure in our industry, revenue per available room? What are they seeing in the luxury sector versus what are they seeing in the select service sector? But what I'd be most looking for is what's the forward outlook? What are they seeing in advance bookings for groups or otherwise, across the system? What are they seeing in system-wide new hotel openings? And I suspect we'll see that there's quite a robust pipeline there. But in this environment, I'm a little bit more suspect as to how quickly, you know, those pipeline assets will turn into actual construction starts, just because of the availability of construction financing and construction costs right now.

Well, getting into construction costs, I mean, it seems like construction costs are really high right now. What does it take to construct a new hotel these days?

Unfortunately, I would say every aspect of constructing a new hotel is hard. So you start with, it's about finding land, buying land, it's about the underlying entitlements and getting approvals, and then it's about the actual construction, right? All of that, before you actually talk about consumer absorption of the new hotel. And if you think about those three areas, they're all harder than they've probably ever been. Land is scarcer, land is more expensive, construction financing is more expensive. And approvals, generally speaking, from a regulatory perspective have gotten harder, not easier. So, understandably communities are, you know, not always running towards wanting to build new hotels, but at the same time there's increase in demand and prospects for increasing demand over time. So, you know, you certainly do need some new supply to be able to accommodate that in many leisure markets around the world or urban markets.

But the difficulties that you're describing mean that revenue per available room is probably gonna be higher because there aren't that many available rooms being built.

Yeah, yeah, fundamentally, I mean, if you look at the industry over a long time horizon, we've generally had supply growth of about one point a half to 2% per year, you know, compounded for decades, and demand growth of, you know, say half a point to a point, point and a half ahead of that. Today, you see supply growth that's something that, really frankly, rounds to zero. Now, which is interesting 'cause you've got these very large pipelines that the public hotel companies, that the hotel brands have, but they're spread out over a very, you know, large geographic area and a large existing room base. So, when we look at the near term pipeline for supply, and you can, you know where shovels are in the ground, you know, we're expecting that to be somewhere between zero and half a percent per year as you look out over the next three and four years, which is where you have kind of the most clarity. And so that should mean that you're gonna start to see a bit more pricing power in the industry. And I think accelerated RevPAR growth, 'cause that's a tailwind. Recently, pricing power has been a bit reduced. Coming outta COVID, where we saw a real surge in demand and a surge in pricing. So, the market now is absorbing that over the past couple years. We suspect that you'll see that resume a healthy upward trajectory. Not necessarily dramatic, but healthy, over the next year or so.

You expect to see stronger demand outside the US, I believe, and why is that?

Well, I'd say this year specifically, what we've seen is stronger international demand than you have in the US. Hilton's earnings reiterated that, our own data shows that we're up about, this year we're up, oh, about 7% or so in revenues, this year, in 2025. So, I think that's happening for a couple of reasons. One is that there's you know, still tremendous desirability for, you know, American travelers to go to places like Italy, France, Spain, on summer holiday. Some of those international markets frankly, they're coming off of low bases of travel so they're accelerating quite a bit. And in the US you have some headwinds. I think the tariff announcements created uncertainty in the market, and that created some consumer hesitancy. We saw our booking volume going into the tariffs be about, you know, give or take nine, 10%. We saw that come down a few points with the tariffs or a little bit more than that, and then rebound as we went through the summer. And consumers, I think realized that okay, the outcome of this is not going to be quite as impactful as perhaps people thought in April. So, I think there's just some of that noise. You've seen a reduction in international travel to the US. It's not a huge number in the scale of the overall hospitality industry. It's kinda single digit percentage, but it's still marginally impactful, more impactful in places, you know, that tend to have more international demand, like the coasts.

Okay, Eric, so we talked about Marriott, but we haven't gotten into Hilton Grand Vacations and Airbnb. What do you see in those businesses?

Well, I think in contrast to Marriott, Hilton Grand Vacation and Airbnb are really primarily focused on the leisure consumer. And the leisure consumer, you know, is the part of the market that we think has the best resiliency and the best long-term demand outlook. So, certainly that doesn't speak to what will happen with earnings next week. I don't have a particular perspective on that, but I would be looking for, you know, the same type of information that we talked about for Marriott. What are they seeing in forward bookings? What was their RevPAR breakout between, you know, geographic segments and or kind of chain scale, if you will. It's a little different, you know, but you still have higher end properties versus lower end properties for both Airbnb as well as for Hilton Grand Vacations. So, ultimately, I think those businesses are positioned really well because they sit squarely at the intersection of where the consumer wants their travel experiences to be, which is, you know, high levels of experiential travel, multi-generational travel, and in some cases longer stays that are facilitated by more remote work. And people want perhaps larger accommodations for that. So, whether it's a timeshare or a vacation rental, either way, you know, they cater to that segment quite well.

They cater to your segment, right?

They cater to the mass affluent segment. Some cater more to, as we say, the more affluent side of mass affluent and some cater a bit more to the mass side of mass affluent. But the nice thing about vacation club ownership, and we're in that business too, we own holiday and club vacations, the nice part about that segment is that they provide an accessible price point for people to come in and access those types of properties in a wide variety of leisure-oriented markets. And so, you know, we participate in that segment and we think it's a really attractive one.

So, can we go back and define what mass affluent means, in the KSL definition?

Sure, I'd say we think of that as the top 10% or so of income earners. So, think of that as six figure household incomes, kinda mid, you know, a hundred to $200,000 per year with a college degree. I mean, that would be your prototypical mass affluent consumer

Consumer sentiment, you know, held steady in October, but it's still near historic lows. We have high inflation and hiring has slowed. How does that pessimism translate into the travel industry, if at all?

Well, we survey consumers around the globe on their intentions to travel. And interestingly, in the next year, we ask the question of basically, "What do you intend, do you intend to spend more or less on travel over the course of the next year? And where does travel rank in your priorities of spending?" And from India and China to the US, travel ranks number one in the consumer desirability in terms of where they wanna spend money. And virtually all markets expect to spend more on travel. I don't mean because of prices, I mean because they wanna do more of it in the coming year than they did the last year. So, I don't think that broader consumer sentiment data, frankly, is what we're seeing in the travel industry in particular. If you think about it at its simplest, if people are stressed out, what do they wanna do? They wanna go on vacation. If people are really happy, what do they wanna do? They wanna celebrate, they wanna go on vacation. So, I think there's kind of a bit, not to be flip about it, but I think there's a bit of an innate desire for exploration and for connection, and travel provides that, experiential travel provides that, and that's what we see.

What about the hesitancy of people to travel to the US? Does that affect your business at all?

When we look at our trends this year, we're down in travel from Canada and from international markets a bit. We're up in our international businesses, but overall, when we look across our portfolio, we're up give or take 8% in revenues for the year and about 14, 15% in EBITDA. So, we've had a very healthy year, and I suspect that, you know, that's similar actually to our trends last year, and I suspect next year we'll actually be equal if not better.

We're gonna take a quick break and when we come back we'll have more with Eric Resnick from KSL Capital Partners. A number of the big hotel companies no longer own their own real estate, right?

Eric: Mm.

And that's affected their stock prices. And there's been sort of a divergence in the ones that own real estate and the ones that don't own real estate. Can you talk a little bit about why that's happened and what you think about that divergence?

That divergence has happened over the last 30 years and put aside performance for a second. I mean, the genesis of that was, you know, operators and brand companies, you know, have evolved to be loyalty businesses, distribution businesses, in addition to operators and brand businesses. And the real estate-owning entities have bifurcated from that, the hotel REITs and so forth. What we see is there's been a real benefit to us from frankly doing both. So, we tend to be an owner operator. We tend to operate our own hotels, we own those hotels typically. And we'll partner with the brands, we partner with many other brands, to provide distribution and branding services under typically a brand franchise arrangement. And so, you know, for us, that allows us to get the best benefit of access to the brand, when we're using the brand, but also be able to kind of align our interest between, you know, owning the real estate and operating it. I think over time the public markets have rewarded the brand companies in particular because they're capital light, they've got these large system pipelines that provide unit growth, and they've been frankly proliferating brands, right? There's so many more brands out there than there used to be. And they have found a way to tailor those brands to individual customer segments to basically meet the customer where they are. And I think that's been really successful. They've also evolved the brands to appeal to real estate owners who want to continue to operate the real estate or to cater to real estate owners who say, "I wanna take a hands off approach. Can you take this off my hands and manage it for me?" And overlaying all of it, the brand companies, the hotel companies, have done a tremendous job building out their loyalty programs. So, whether it's World of Hyatt or Marriott Bonvoy or Hilton Honors, I mean, they're incredible loyalty programs giving value to the customer. And so, you know, virtually every brand, including the international ones, of course, Intercontinental and Accor are doing the same thing and that's been really positive for the brand. So, I think that's helped fuel that. But fundamentally, there is a real value to owning real estate. It's just, you know, not every investor is looking to own the actual real estate, but it's lower risk, it's highly tax efficient, and you know, for us, if you control the operations as well as own the real estate, it allows you to generate excess cash flow from that real estate, we find, because of that controlling all the levers of the value equation.

And if as a public markets investor, I wanted to own the real estate, what's the best way to do that?

Well, the hotel REITs provide a great opportunity to do that. And there's a whole host of the hotel REITs that certainly, they don't have favorites over others, but, you know, they have different strategies and that's a great way to own hotel real estate. I think increasingly, you're likely to see that, you know, there's private market ways for investors to play those, for those markets as well.

So, a lot of people say travel is cyclical, and you kind of got into this at the beginning of our conversation, but you disagree with that broad characterization. Can you talk a little bit more about why you disagree with that?

Well, I think we define cyclicality travel because we think about that large hotel in an urban market where, you know, we tend to live, and we say, "Oh gosh, business travel, that fills that hotel, you know, five days a week or so," that that travel goes away the second that, you know, a CEO of a business sends out that email that we all have versions of that says, "Hey, times are tight, tighten your belt, cut non-essential spending." And look, often business travel is the very epitome of non-essential spending. And doing things like this, right, video conferencing or Zoom or you know, et cetera, makes that easier to cancel that last minute business trip. But if you think about that as it pertains to leisure travel, it's just not the same, right? You don't take a Zoom vacation. You know, I don't think we're doing that. We're not doing a virtual beach holiday, and so-

That doesn't sound very fun.

No, it's not fun. And you know, until a virtual holiday equals a real holiday, you know, I think you're gonna continue to see this trend where leisure travel is remarkably resilient.

How has social media affected the travel industry?

Social media has had a tremendous positive effect on the travel industry. If you look at your social media feed, it's far more about experiences than it is about material goods. And the number one experience that people think of, that they post about frankly, is travel, right? It's you having climbed that mountain. It's you, you know, on the golf course. It's you in the park, it's you at the Louvre. It's you in New York City at the great restaurant, whatever it might be. It's not you going shopping at the mall. And that is both leading and a indicator of the trend that we've seen in favor of the experiential economy over the material goods economy that frankly started 60 years ago. And we've seen compound growth in travel of 7% for 60 years as a result. And I think social media only makes that growth more accelerated because you look at Instagram, as an example, and what you're seeing are aspirational videos and photos, you know, of what do I wanna do and where do I want to go and travel's at the epicenter of that. So, whether it's Instagram or TikTok or whatever your preferred platform is, I think it's nothing but good for travel and it's going to continue to be.

Thanks Eric. We're gonna take a quick break and when we come back, we have one more question for Eric Resnick. Okay, Eric, in 30 seconds or less, is the rise of AI good or bad for the travel industry?

The rise of AI is nothing but good for the travel industry. AI is going to make it easier for us to plan our trips, and frankly, those travel providers who are most well suited to provide the experience you want are going to be the ones that are surfaced by AI as recommendations. So, I think if you're a high quality travel operator, AI is nothing but good. I think frankly, it'll allow you to connect directly to your customer more quickly. And anything that allows you to get to your customer directly, we think is a real positive.

So, we aren't gonna be taking AI vacations anytime soon? I don't think so. We once did an advertising campaign that showed people in New York City with their feet in like a sand bucket holding a martini or a margarita in their hand with virtual goggles on that was showing them on the beach. And I think we learned from that that, you know, as cool as that was, it didn't substitute for having your feet in the sand, you know, in Jamaica or Cancún or Kava, right? It's just not the same thing. So, I don't think the AI vacation's gonna threaten us anytime soon.

Thank you so much, Eric. This conversation has made me realize I need to go on a vacation. I hope you do.

I really appreciate you joining us.

I hope, we can help provide that. So no, it's a pleasure being with you Miriam. Thanks for the time.

WSJ's Take On the Week brings you the insights and analysis you need to get a leg up on the world of money and investing. We cut through the noise and dive into markets, the economy and finance. Join The Wall Street Journal's Telis Demos and Miriam Gottfried in conversation with the people closest to the hot topics in markets to get incisive analysis on the big trades, key players in finance and business news. The duo will bring actionable insights to a range of investors and business leaders while also entertaining a broader audience with lively, relatable conversations. Episodes drop Sundays.