Is the Optimism Justified?
Perhaps it was justified, perhaps not, but attendees at last month's Americas Lodging Investment Summit in Los Angeles were nearly giddy in their continued optimism concerning the health of the U.S. lodging industry. As it is with many issues, however, there are two distinct sides to the story.
Of course, the recent media headlines trumpeting the supposedly sad state of the national economy (the credit crunch, wavering stock market, weak dollar, poor retail sales and more) should give hotel owners concern. After all, the operating side of the business typically mirrors the economy: When consumers and business owners fret about the economy they usually travel less.
Yet, in past economic cycles it's been the hotel industry itself that created most of its own problems. During boom times, hotel owners and developers feel bulletproof and sometimes make stupid investment and development decisions, resulting in overbuilding, overleveraging and eventually, lower occupancies and rates.
By all accounts, it's different this time. While lodging construction is up (at the end of '07, the pipeline of hotels under development topped 700,000 rooms, a record, according to Lodging Econometrics), the pace is more measured and less frenzied than in past cycles. And as the recent consumer credit crunch cascades down to commercial real estate, some hotel deals, particularly those that only make marginal sense, may be scuttled.
Much of the news generated during ALIS was upbeat, even exuberant. Choice Hotels stunningly announced that Oklahoma-based Bell Hospitality Group plans to build at least 50 MainStay Suites and Suburban Extended Stay brand hotels in the next few years. Nine contracts have been executed, and Bell says it will have all 50 properties under development by the end of 2009.
While NYLO Hotels, the upstart lifestyle brand, has just one property open, during ALIS it announced an aggressive franchising plan and introduced a select-service brand extension, called XP by NYLO. And the conference's biggest splash may have been the debut of Edition, the boutique brand Marriott International and Ian Schrager are jointly creating. Bill Marriot says the brand will eventually have 100 properties around the world; Schrager thinks it will be more like 500.
Whether the industry's cautiously optimistic mood is on target or misguided won't be known for months or years. No matter, as it's heartening to be part of a business that finally has the knowledge, confidence and resources to persevere no matter the environment.
I have some sad news to report: Lodging Hospitality Business Manager and longtime Penton Media employee Bobbi Moran died last month following a prolonged illness.
While her title was business manager, Bobbi was much more. She was our conference manager, travel planner, numbers cruncher, marketing guru and sometime den mother to our mostly male staff. She was a hard worker who cared about Lodging Hospitality and all of us and showed her concern through warmth and humor.
As the news of her death trickled through the industry in recent weeks, we've received numerous messages of condolences. All who knew her and worked with her will miss Bobbi.
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