More than 100 lodging industry executives gathered at the Fairmont Chicago Tuesday for an aptly named “Navigating Troubled Times in the Hotel Industry” discussion. Michael Medzigian, chairman and managing partner of Watermark Capital Partners, opened the already somber-sounding seminar with even more sobering news: PKF Hospitality Research’s latest forecast released that morning projected a 7.8 percent RevPAR decline in 2009.

Worse yet, PKF predicted U.S. lodging wouldn’t experience a year-over-year quarterly increase in RevPAR until the second quarter of 2010, after seven straight declining quarters, the longest such stretch since Smith Travel Research began tracking performance in the late 1980s. The 7.8 percent drop next year would be the fifth steepest since 1930.

Attendees at the invitation-only event put on by law firm Perkins Coie didn’t dispute those numbers. The panel on the opening session, “Managing Hotels in a Down Economy,” thought it could be even worse. Biff Hawkey, senior vice president of development for Hostmark Hospitality Group, predicted a 15-percent decline in RevPAR for luxury hotels, while Michael Shindler, president of Four Corners Advisors, thought major cities could see a drop of 12 to 15 percent, while the rest of the U.S. would fall just three percent. Both Cory Warning, vice president, acquisitions & development for Strategic Hotels & Resorts, and Deno Yiankes, president and CEO of White Lodging Services, agreed with PKF, expecting a six to eight percent decline.

The news wasn’t any better on the lending side. “The lending environment is non-existent,” said Ben Nummy, managing principal of Equibase Capital Group. “I’m still searching for the money.” The best—any maybe only—hope for getting a loan is with local and community lenders, for smaller amounts, from a couple million to 20 million, tops, he said. “It’s got to be a bite-sized deal.”

Dave Sims, principal of Lodging Capital Partners, said his pessimistic projection of hotel values was a 30 to 50 percent drop from their 2007 peaks. But, optimistically speaking, he said the cycle—and turnaround—would be quick because of how fast information spreads in today’s high-tech world. The caveat: a larger global recession would halt the recovery.

Everyone agreed owners looking to sell, or forced to, are in a lot of trouble. Scott Steilen, principal and managing partner of Warnick + Co., pointed to the opposite ends of the room and said that’s how far apart buyers and sellers are. The only buyers out there, said Rich Silverstein, vice president of commercial acquisitions for Waterton Associates, are high net-worth individuals or those who can’t turn down a good deal.

Keynote speaker Laurence Geller, president and CEO of Strategic Hotels & Resorts, capped the day with an energetic pep talk on why the industry was poised to survive this downturn:

1)    Supply growth (two percent, he said) has been reasonable, unlike during the last downturns;

2)    Brands have gotten better and are more collaborative with owners;

3)    The homogeneity of guests; no matter the demographic, they all want the same thing;

4)    People like making money, therefore lenders will come back, they always do;

5)    Downturns act as sieves for weeding out the amateurs;

6)    Americans, with their entrepreneurial and optimistic spirit, will get bored with saying “it sucks,” and they’ll “drag us out of this” recession.

Geller said he had no idea when that would happen or how bad things would get, but they “will be bad.” He guessed the first and second quarters of 2010 are when things would start on a positive trajectory, but as with any cycle, it would take four years to come all the way back.

So in the meantime, how do hoteliers navigate these troubled times and stay afloat? The consensus strategy was asset management: Consolidate and cut whenever and wherever possible, with brand standards, labor, amenities, food and beverage. Don’t cut rates, but drive revenue through other deals that disguise what actually may be reduced rates. If you’re facing a loan coming due, work with your lender. They don’t want to take back the property or deal with foreclosure. Bring something to the table and if you’re not overleveraged, you’ll likely get a reasonable response—at a price. And if you’re under water, you may still get a response, but at a much higher price.

Perhaps Phil Gordon, a partner with Perkins Coie and the day’s host, said it best when he borrowed from Ben Franklin in his opening remarks. “We must all hang together, or assuredly we shall all hang separately.”