2011 may not have been the hotel industry’s best year, but it sure could have been a hell of a lot worse. As we discuss in this month’s industry forecast story (starting on pg. 22), lodging demand, rate and RevPAR all improved in 2011, and this should be another year of gains. But what else is ahead for 2012 and beyond for the industry? Managing Editor Eric Stoessel and I present our thoughts on what will be the big news stories and trends in the coming 12 months:

The biggest event in the U.S. this year will be the presidential election and while the campaigns will certainly be a boon to business for a few hotels, many owners and operators are more anxiously awaiting the outcome to see in which direction the nation and economy will be heading in the next four years. Many business owners and executives say uncertainty is keeping them from expanding their businesses and hiring more employees. Eleven months from now that curtain of uncertainty should be lifted, and perhaps the economy can kick back into high gear. If so, the lodging industry will be a prime beneficiary of an improved business climate.

The industry rumor mill has been buzzing in the past year or so on the possibilities of hotel company mergers, acquisitions or public company filings. This should be the year something will happen: Hilton or La Quinta going public, or Choice pulling the trigger on the acquisition of an upscale brand, or Motel 6 getting sold or Red Roof buying or selling.

Jones Lang LaSalle Hotels may be off the mark in their forecast of a flat year for hotel transactions. The firm says $30 billion in worldwide hotel sales will be about even with 2011. But it needs to be put in context: While possibly even with last year’s volume of transactions, $30 billion is quite an improvement over the paltry $9.8 billion in sales in 2009. With some normalcy returning to the capital markets, an economy that’s at least stabilizing and a slew of distressed lodging assets coming to market, 2012 should be better than last year for hotel sales.

It should also be a good year for interior designers, contractors and ff&e vendors as the industry seems destined to undergo a massive upgrading of its stock. Many hotels have been limping along for five or six years with no major renovations or improvements, mostly due to the downturn in business and profits. And while the chains have been merciful in not fully enforcing upgrade requirements, that has begun to change. And many of the hotels sold this year will be accompanied by changes in branding, which will lead to additional renovations. It’s time to roll up the sleeves and get out the paintbrushes.

The number of new hotels to open this year is at a near-historic low, thanks to the lack of interest among lenders. And while that won’t change significantly this year, signs indicate some banks and other lenders are beginning to gear up to offer development financing. As Fred Cerrone of Hotel Equities told me, “Until recently, when you brought up the topic of new hotel development to a banker, the answer was not now and not ever. Today, the response is more likely to be not now, but maybe at some point.”

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A Look Into the 2011 Crystal Ball
Jones Lang LaSalle Sees Hotel Deals Flat in 2012
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