Carlson's Nancy Johnson answers a question from Ed Watkins, third from left, while La Quinta's David Wilner, left, and Choice's David Pepper look on. Photo by Andréa Cimini.

The Americas Lodging Investment Summit is the annual bellwether of the industry, setting the tone for the year in lodging. To get an even better understanding of where the hotel world is heading, Lodging Hospitality gathered a roundtable of industry leaders immediately following the conference to discuss their takeaways and to get their thoughts on the year ahead.

CLICK HERE TO WATCH THE COMPLETE VIDEO OF THE DISCUSSION.

Ed Watkins, editor, Lodging Hospitality: What were your takeaways from ALIS?

Roger Bloss, president and CEO Vantage Hospitality: At one of the major sessions here, as we looked around the room, there were very few people in there. Everybody was out in the hallway doing deals. So I think that was a huge change from the last couple years when we were in those sessions, really wanting to hear ‘OK, how do we work through this?’
Kris Jamtaas, senior vice president, business development and sales for Group RCI: I was surprised at the enthusiasm I saw both on the hotel side of the business and in the shared owners side. Clearly, we've spent two years hunkering down and most of our companies are a shadow of themselves. Now it's a bright light in a long tunnel because financing looks like it's becoming available and there are people starting to do deals again.
Paul Sacco, senior vice president of North American development for Starwood Hotels & Resorts: Every meeting we had here at the conference we left with a to-do list of people looking at potential acquisitions and even a couple of new-build opportunities as well, which was a nice thing to see.

Watkins: What do you see as the hot spots for development, both in terms of locations, markets and in types of properties?

Bill Fortier, senior vice president of development for the Americas, Hilton: I would start in the U.S.: The top 25 markets—the top 10 markets are on fire right now—as far as people looking to buy. And there's actually money available to build new in those markets like DC and New York, Boston and even a little bit in San Francisco. So those markets with high barrier to entry with the international travel, they're sexy and people want to be there, and they're dying to get in.
David Wilner, vice president of franchise development, La Quinta Inn & Suites: Opportunities also lie outside the U.S. I think a lot of us are really focused on South America, Central America and, obviously, Asia and India
Sacco: China is just booming for us right now.
David Pepper, senior vice president of global development for Choice Hotels International: Conversions are the opportunity. There is no supply growth for probably the next two years. And with the RevPAR increases we got, I think all of us were surprised at how quickly it came back, and without unemployment going down. So I think a lot of people are seeing opportunities to buy assets. There are going to be some incredible RevPAR increases over the next two to three years with this lack of supply that's opening. So it's almost a once-in-a-lifetime opportunity. If you can find some assets, you're really going into a major upswing that could be a lot better than all of us even think.
Wilner: In the third or fourth quarter this year, we're going to see new construction starting to rebound hopefully, and we're starting to see signs of financing loosening up, especially for those $5 million to $7 million deals. If you can get the financing right now, this is the most opportune time to build a new hotel or start the planning for a new hotel so you can open up in 18 to 24 months from now and take advantage of the upswing.
Nancy Johnson, executive vice president of development, Carlson Hotels Worldwide: But I think the developers are seeing right now that's the critical issue: If you can get the financing. The lending institutions are still holding their purse strings very tight. I think conversions are going to be how it's going to be for 2011, except for the top 10 markets, and for big, big developers with deep pockets.

Hilton's Bill Fortier, center, and Group RCI's Kris Jamtaas discuss the timeshare business while Starwood's Paul Sacco looks on. Photo by Andréa Cimini.

Watkins: What about on the shared ownership side?

Jamtaas: Well, the freeing up of financing, which we're just starting to see, has definitely stimulated interest. Obviously, the Hawaii market, particularly for the Asian tourist is still a real hot spot for us. We're still doing very well in India. Those are pockets of great development opportunity and growing interesting, so it's a very healthy climate.

Watkins: What factors could mitigate this kind of rosy outlook?

Gus Stamoutsos, executive vice president of development for Wyndham Hotel Group: Unemployment's huge. When you look at a broader economic cycle, is there inflation globally where interest rates will start going up? People are at least entertaining conversations about financing, but if the financing doesn't improve, it'll jeopardize the speed of this.
Bloss: What we also have to look at is our product hasn’t had a lot of CapEx [dollars] put into it recently. So if we don't get our properties back to a reasonable position of quality and standards, then I don't think we'll be able to push the rates back where we want.

Watkins: Most brands showed some forbearance to their owners in the last couple years in regard to product standards and upgrading. Is that going to start winding down?

Pepper: I think as money does open up more for conversions and some renovation dollars, you'll start seeing the brands go back and start looking at being a little bit tighter. I think you'll probably see some brands that have really held off on kicking some hotels out from a [quality assurance] perspective to start being a little more aggressive and removing hotels from the system that don't meet the customer needs for the brand.
Johnson: I think one of the things that we saw from the brands is that they worked with the owners and developers to put the money where it would matter most to the guests. We aren't going to forgive these brand standards.—we are going to delay them. And we're going to put in priority those renovation items that matter most to our customers.

Watkins: The last two years at this conference the talk was the following year was when all the distressed properties came home to roost, and there was going be a big blood bath. Is this going to be the year where the distress situation gets more cleared up?

Stamoutsos: I think there will be more foreclosures than last year taking place and be in process.
Pepper: I think the attitude of a rolling loan that gathers no loss is still in play. I mean, it's worked for the banks. They've rolled these loans, and a lot of them have gotten sold, and they've gotten their money out. So I think the banks have learned a lesson. It's not like the RTC days, when they were giving away hotels. Maybe they might get a little bit more aggressive with more of the upscale and luxury [properties] since there are some serious buyers out there looking with a lot of cash and cheap money.
Wilner: It seems like those properties that were foreclosed on, either everyone wants those properties or no one wants to even touch them. They haven't seen the capital improvements in the last seven years. And the properties that everyone does want, there's a lot of money on the sidelines, and they're bidding those properties up.

Watkins: Who are going to be the buyers this year?

Fortier: We’re seeing a lot of international money come in. With the issues with the dollar, U.S. assets are on sale, and there are funds all over the place that are just waiting.

A panel of industry leaders discussed their outlook on the lodging industry after AIS concluded. Photo by Andréa Cimini.

Watkins:Several of the brands here at the table have soft brands or collections, which is growing in the industry, but is it a fad or more a long-term trend?

Pepper: I think it's been a really good opportunity for owners. A lot of boutique hotels were built [by owners] thinking that they would be able to live on their own. With the Internet, and then in this downturn, they really realized they needed the power of a distribution system. So it was a great opportunity for a lot of the companies here to use that distribution platform. It's a great opportunity for the brands if they don't have enough product to meet their needs.
Sacco: It’s here to stay. We’ve been doing it with the Luxury Collection. And our approach is really on a pure luxury platform. It's an opportunity for owners to increase return on invested capital, to have a global look at their business and to feed off a very strong distribution system while maintaining the authenticity of their individual asset as well.
Johnson: I've been in this business for so long and I've seen this come and go, but it works very well in luxury when you really do a true collection. The trouble that you have is a lot of times it diminishes your existing brand value. And you need to make sure that you keep the reason your franchisee buys a Radisson or a Country Inns & Suites is because of the support system that you have for them. You need to maintain that purely for them. So to have the soft brands, unless you have them in such a unique category and there's a true differentiation, it dilutes the other brand value.

Watkins: What is it going to take for the economy to turn around?
Stamoutsos: The return of jobs will create more companies hiring, having conferences and training. If consumers feel good about their jobs and don't think they're going to get fired in the next six months, then I think people will continue to spend, in addition to just taking that one vacation. And businesses will start spending, and spending money on training and everything else in hotels.
Bloss: I really hope housing comes back. I think that's going to be a major factor as well. We're entering into our first year of the next decade of baby boomers. Over the last couple years we were always preparing for the baby boomers coming. Until baby boomers get their wealth back from their stock and their values on housing—those are going to be really two critical factors.

Watkins: What is the major focus going to be for your company in the remainder of the year.

Sacco: We're going to continue to have a global focus. We’re going to be very focused on making sure we're doing as many solid conversion deals as we can.
Fortier: The first thing we're going try to do is convince our franchisees and work with our managed properties to raise rate because we think there's a huge opportunity for it. We can't be shy about it anymore.
Jamtaas: Internally, we're focused on the customer. We know anything we can do to enhance the experience they have through our service is a benefit to the development community.
Pepper: Cambria Suites is our main focus. [CEO] Steve Joyce and the board have approved us to use our balance sheet and invest in Cambrias and partner with developers to grow the brand
Johnson: Our main focus is on the growth of the Radisson brand. For Country Inns & Suites, it's really going to be doing more conversions than we normally do, but it's going to be selective conversions and starting to tee that brand up for growth globally.
Wilner: It’s going to be continued high-quality growth. Yes, looking at more conversions, but in a very, very disciplined manner. Another focus is on downtown urban centers, more primary markets, whether that's through adaptive reuse or conversions.
Stamoutsos: One is creating more clarity between our brands. The other thing we're looking to do is generate more revenue for our franchisees. I think this is an opportunity where we could look at our technology, websites, property management systems and revenue management systems and invest in those.
Bloss: First, from a Vantage standpoint, we are looking at acquisitions both in other brands that might become available, as well as hotels themselves. From Americas Best Value Inn standpoint, we want to work really hard in making sure [members] are doing the right FF&E improvements as quickly as possible. As we announced in December, we've had the introduction of Lexington Inn, so that's going to be a huge focus for us.