The volume of good news about the hotel business arriving on my computer screen has increased dramatically in recent months and weeks. Every week, we hear of improvements in occupancy and rate, and we get press releases daily on refinancings, acquisitions and even new hotel openings. Clearly, 2011 will be a better year for the lodging industry than was 2010 and, of course, much better than the dark days of 2009.

Yet, it’s not quite time to break into choruses of “Happy Days Are Here Again.” The industry, as well as the country and the world, face serious problems, any one of which could at a moment’s notice plunge the economy and the travel business back into an abyss. Among the potential buzz killers are the continued absence of job creation, the long and costly waging of multiple wars, the growing gulf between the rich and the poor, unyielding gridlock in Washington and a variety of international near-crises that could explode at any moment. But let’s set aside the drama for a moment while I recount the positive signs we’ve seen that should portend a better year ahead:

Following what STR’s Mark Lomanno called “the worst year in the history of the modern hotel industry,” 2010 has proven to be brighter than most analysts predicted. STR says we’ll end the end the year with a 5.2-percent jump in RevPAR based on a strong 7.4-percent leap in occupancy. Nearly every week in the final few months of the year has seen consistent double-digit increases in RevPAR. The forecasts for ’11 aren’t as aggressive since the industry bounced back so strongly this year, but undoubtedly the outlook is still very positive.

While hotel performance drives the business, the industry won’t fully recover until its significant financial troubles are solved. Thousands, perhaps tens of thousands, of lodging properties are still mired in some kind of distress. Some owners are a month or two behind in making mortgage payments; others are relying on the kindness of lenders to carry them; yet others have been foreclosed upon or have just
sent the keys back to the lenders. The answer to this dilemma is liquidity in the lending arena. Once financial sources again feel good about the lodging market, money will flow, hotels will be refinanced or sold and equilibrium will return.

It’s beginning to happen, as evidenced by the amount of transactions getting done in recent months (granted many of them, particularly the big-ticket deals, are being consummated by cash-rich REITs) and by public pronouncements by financial companies that they’re ready to reenter the hotel finance marketplace.

Fingers crossed, 2011 will be a strong comeback year for the hotel industry. Fundamentals and profitability will continue to improve, more deals will get done and the backlog of distressed hotels will begin to diminish. We all hope I’m right. Check back next December and we’ll see. I wish all of you a happy and very prosperous new year.