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 that will “connect the dots” to be helpful not only in business but in life as well.
Well, what a year it has been. We are now sitting here in October as of this filming and we want to start talking about where are we in the economy, what does it mean to our industry and what do we think the future looks like.
Here are the positives and the negatives. We have what I like to call the ‘great pause.’ We had a great pause between April, and you saw maybe July and August, and that is in almost in every major economic KPI that you could see, and specifically in our industry, where we saw a great pause with this indecision: are we going to move forward, are we going to have meetings. What we're seeing right now is a very fast and maybe great recovery, which is outstanding.
Our in-the-year, for-the-year business, we're hearing from many of our Members, is really well over expectations for the last half of the year and if you look at the back half of the year, the books look really good. Latest CBRE data actually shows us as well. Searches for travel, specifically Google searches around brand and travel, are up almost 7% and that had declined dramatically in February, March and April, which actually impacted the summer. So very much a lot of optimism for the back half of the year.
We're hearing it from airlines, cruise lines, hotel companies that are reporting out on earnings calls and, most importantly, we see ’26 being really, really active on the back half of the year.
Economically speaking, we came out of Q2 with a revised GDP of 3.8% much stronger than anticipated. The original reading was 3.3, has been revised to 3.8%. We are seeing really strong growth in our economy expecting all the headwinds from the tariffs, the tariff piece of this that we had expected back in April. We're just not seeing a lot of that headwind yet. Doesn't mean it won't come, but currently, we haven't seen that.
I say often it's important not to get ahead of your skis. Stay very focused on the data that we currently have and the data we currently have says things are okay.
Interesting part is the Atlanta Fed just gave their estimations for Q3 GDP and that expectation is actually a little bit higher than Q2, which means we could be running very close to 4%. That would be outstanding. It would show a lot of health in our economy. Corporate earnings continue to be really robust—80% of the companies that actually reported out on earnings in Q2 beat guidance and the average is usually 67%. So, that's telling us right now that corporates are pretty healthy. We're seeing the economy be very healthy.
Yes, we see a little bit of a slowdown in the labor market, and we'll have to see what all that means moving forward. Probably the biggest uncertainty at the time of this filming is our government has just shut down. How long that lasts will have a lot of implications as far as what that GDP could look like, specifically in Q3. The longest shutdown we've had is 35 days. Some of the shortest have been two to seven. I'm hoping it's somewhere in between and this isn't long-standing because it could have implications to travel as far as some slowdowns and such.
But overall, we are also expecting the Federal Reserve to lower rates once more. They already had one rate cut. Why does that matter? That is really good for investment. That is good for moving money through the system and really good for small businesses. So that's encouraging.
All the way around, we're seeing really positive signs and probably one of the most positive signs in the last earning cycle in Q2, less than 75 of companies at any time in the report mentioned the word recession. So, we've gotten past that thought process of a recession being in the headline.
I think ’26 is going to be very robust for the industry. Let's not forget we have World Cup, so we have a built-in compression, expecting four and a half million-plus of new international guests to be here for World Cup and that is going to compress us as an industry overall as I've talked about in the past.
So, as of October 1st, we're looking pretty good, excited about the last half of the year, and most importantly excited about ‘26 and what's to come.
Wishing you all a really, really successful finish to 2025.