While the hotel industry still faces a number of challenges, things are beginning to look up, at least according to a panel of hotel company leaders who spoke at last week’s well-attended and upbeat Hunter Conference in Atlanta.

“I’m very optimistic,” said Stephen Schwartz, chairman and CEO of First Hospitality Group of suburban Chicago. “People are traveling again. The recession is ending, and the hotel business will improve sooner rather than later.”

But for a brand builder like Steve Joyce, the current environment makes significant growth a difficult task. In particular, the president and CEO of Choice Hotels is trying to nurture the launch of Cambria Suites, the company’s much-ballyhooed entry into the lifestyle lodging segment.

“With just 20 hotels open, we have a real problem with the brand in terms of distribution footprint and customer recognition,” said Joyce candidly. The company’s response has been to put marketing and financial muscle behind the product.

“We’re helping in the sales efforts for the Cambrias that are open,” said Joyce, “and we’re putting our balance sheet to work to provide pieces of the capital stack for new projects.”

While Choice had hoped developers would open 50 Cambrias this year, Joyce will now be happy if 10 properties come online.

Other types of new development will be difficult to achieve, admitted Joyce, despite changes in SBA lending rules that increase loan limits to $5 million and increase the amount of money available through the program.

“That will help,” said Joyce, “but it will still be tough to do new-build properties for at least another year or longer.”

From an owner’s point of view, Jay Shah sees light at the end of the tunnel. “If the operating cuts we made are sustainable, we should see very positive effects on our bottom lines as demand starts to move upward,” said Shah, CEO of Hersha Hospitality Trust. “Also, by 2012 we expect to see inflation driven by robust growth in the GDP. And, of course, inflation doesn’t really hurt the hotel business.”

Shah believes the hotel industry reached an inflection point earlier this year. While he said his properties still have little pricing power, occupancies were better for several weeks this year when compared to 2009. And the company is topping 70-percent occupancy in five of the seven markets in which it operates. In New York City, occupancies are above 90 percent.

“I believe we will be in a position to test pricing power by the third quarter,” added Shah.

On the transactions front, Schwartz said he’s seen a trickle of deals, mostly distressed properties, but expects the trend to accelerate with a “real bubble” coming later this year.

“Perhaps one reason for the trickle of deals is that lenders may be remembering the profits made following the 1990-91 downturn,” he said. “They may be trying to hang on to take advantage once values begin to rise.”