Hotel Meetings Business Lags, but Set for Recovery

Reaction to reports of seemingly excessive conference spending by the IRS is likely to be overblown, said Mark Hoplamazian, president and CEO of Hyatt Hotels. He spoke with CNBC on Monday from the NYU Tisch Hospitality conference in New York.

"There is no question that there has been some decline in government business," Hoplamazian said. "This past quarter we experienced a significant decline—that was part sequestration." A falloff in such conferences in the wake of the 2008 crisis caused widespread grief in the industry, he added.

The video of IRS employees dancing at a conference is likely to get "overdramatized," he said. "In fact, businesses do derive real value out of getting together and having conferences and meetings. As to government spending, yes, short term it has been weak," but the industry will continue its long-term recovery, he said.

(Read More: Report: IRS Spent $50 Million for Conferences Over 3 Years)

Pascal Walschots

"Meetings are the backbone of the travel and tourism industry," said Jonathan Tisch, chairman of Loews Hotels. "I hope in this conversation that we don't demonize the meeting industry, because when there are meetings in our hotels, it creates jobs."

He told "Squawk on the Street" that about 35 percent of Loews hotel rooms are booked by business travelers and that the conference business has not recovered as quickly as other segments.

"It will recover," Tisch said. "We hope that the meetings industry will start to come back because we have the ability in travel and tourism to create jobs."

With 80% of its revenues derived from hotel ownership, Hyatt's strategy is much different than that of competitors such as Marriott and Starwood.

"It's appropriate for us given where we stand in our development cycle," Hoplamazian said. "There's a natural cycle of using capital to get into key markets where there is a great strategic reason to do so."

But analysts have criticized the company for not providing more short-term guidance.

In response, the company said, "Our business is measured in decades, not in quarters or years, and we are very much committed to running the business in that fashion, which is why we didn't provide guidance to begin with. That's really the business purpose, which is not to become overly burdened with and distracted by a specific quarter."

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul