It's Crystal Ball Time

The year is already a few weeks old, but it's not too late to give my predictions on how 2008 will treat the U.S. lodging industry. Here is my outlook:

A year of uncertainty

It's a major understatement to say that few of us can accurately say whether this will be an up, down or flat year for the industry. The factors that control the hotel business are varied, unpredictable and entirely out of our control.

Naturally, the economy — internationally, nationally and locally — is the primary driver governing the health of the hotel business. Variables as far-ranging as oil prices, international terrorism and the credit markets will go a long way to determine whether at the end of the year we view 2008 as a success or a bust.

It's less dramatic, but I believe it will fall somewhere in the middle. Most hotels will perform well, not as well as 2007 and the few years preceding, but well by most standards. The lesson for owners, of course, is to be bold, but not foolish, in making decisions that affect your property and your investments this year.

Presidential politics

Popular wisdom dictates that the party in power props up the economy during a presidential election year in order to help its candidate win. If that bromide is true, then the Bush Administration has some heavy lifting ahead to keep the economy afloat in the coming months.

I believe it's an old wives tale that will have little impact on the economy or the hotel business. Of course as an aside, it will be fun to watch the campaign unfold.

Green is here to stay

There's no more denying it: the green revolution has hit the hotel industry full force. Nearly every press release touting a new hotel property, company or brand focuses on the green aspects of the endeavor.

Naturally, it's never too late to jump on the green bandwagon as it represents an opportunity to do something good for the planet while improving your operating efficiencies. However, if you wait too long to go green you'll lose any of the considerable PR benefits that come with building or operating an eco-friendly lodging property.

Progress on immigration

No matter your political leanings on the topic, you should agree that the U.S. must quickly solve its immigration dilemma. For the hotel industry, a prompt and lasting solution to the issue of both legal and illegal immigration would have a positive effect. Even if fewer immigrants are allowed into the country to fill jobs at seasonal resorts, at least the industry will understand the problem it faces and will be able to find new solutions.

Unfortunately, the issue is so volatile, and given that it's an election year, I don't think 2008 will bring a resolution to this issue that's so critical to many segments of our industry.

M&A slowdown

A lot of the good deals in the hotel marketplace — including transactions of individual hotels, portfolios of properties and brand companies — have already been consummated, so it looks to me like a slow year in the hotel M&A marketplace. While a few major and perhaps spectacular deals will get done. there won't be the flurry of transactional activity we saw in the past 36 months.

No matter what 2008 brings on a large scale to the hotel industry, I hope you, your business and your family have a happy and prosperous year.

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