Don't Talk Yourself Out of Prosperity
The hotel business loves metaphors, and baseball was the dominant one at last month's jam-packed New York University International Hospitality Investment Conference. More than one speaker referred to the current lodging cycle as a baseball game and gave their viewpoints on what “inning” of the game we're in.
The consensus among the speakers on stage and the attendees in the hallways and lounges of the Marriott Marquis was that we're in the third or fourth inning of a nine-inning game. Put in more concrete terms, most of those in attendance believe the industry has three to four more years of prosperity ahead. A few brave or foolhardy speakers proclaimed that good times will last for another eight to 10 years. I wouldn't count on that.
While it's fun, interesting and newsworthy for corporate leaders to speculate on the future of their industry, there's also a danger to the practice, and that's the phenomenon of the self-fulfilling prophecy. Too much conversation on the length of the cycle can take the discussion away from what's really important — how to maximize the excellent operating results, solid profits and favorable investment climate happening in today's hotel marketplace. There are a lot of deals to be done, brands to create and nurture and, above all, profits to be made before we need to fret about a downturn.
Everyone needs a game plan in case of crisis — or in this case, the seemingly inevitable downward cycle of the economy and the hotel business — but the real efforts in the coming months and, hopefully, years should be on making hay while the sun shines.
This year's NYU Conference was as robust and exhilarating as I've seen in the 28 years of its run. The record-setting attendance of 1,968 surpassed the previous high by 20 percent, and the registration fees and sponsorship money generated more than $700,000 in scholarships for NYU students. Here are some other observations about the event:
A number of speakers, including data gurus Randy Smith and Steve Rushmore, outlined the extent of prosperity in the marketplace. Smith's key fact was that through May, hotel room demand has increased for 36 consecutive months, an unprecedented run of good fortune. Rushmore was a little more circumspect, observing that the run-up in hotel values will soon begin to cool. Values will be up 15 percent this year and nine percent in '07, compared to a 26-percent rise last year. He says values will be flat in 2009 and turn downward in ‘10.
Branding, rather than product development or anything else, was a prevailing buzzword throughout the conference. In fact, event organizers devoted the entire second day of the meeting for in-depth sessions on the subject.
Of course, branding implies new products, and several brand companies trotted out their latest offerings. Cendant and Starwood made the loudest noise with the unveiling of the new Westin extended-stay product (Starwood) and the complete overhaul of the Wyndham brand (Cendant), thanks to cool design riffs from uber-designer Michael Graves.
A highlight of the conference for me was Jonathan Gray's appearance on a general-session panel to discuss The Blackstone Group's activities in the hospitality industry. Calling his company's strategy a “cycle bet and a fundamentals bet,” Gray told the audience to expect more acquisition news from the group. His bi-polar wish list includes beefing up Blackstone's luxury resort collection as well as its limited-service La Quinta brand.
Without adding to the speculation, I believe industry executives will be just as giddy when we meet for the 29th NYU Conference next June. In the meantime, keep your eye on your mission and don't talk yourself out of prosperity.
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