Industry Activity Heats Up At Lodging Conference
Wednesday October 2nd, 2013 - 12:05PM
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Things were most definitely heating up for the industry late last month at the most recent Lodging Conference in Phoenix. If the 106 degree temperatures weren’t enough, there seemed to plenty of deal talk taking place and many executives would later confirm as much to me.
As always, leading economists and research firms were asked to try and provide some perspective on where things are headed. Additionally, top industry executives offered plenty of their own prognostications. And while all of this is of great interest to me, I have to say my favorite quote of the conference came from the always-candid Tom Corcoran, former CEO of FelCor, who noted, “none of us are smart enough to figure out what’s going to happen.” Corcoran had been asked specifically whether he saw any red flags regarding the pending Hilton IPO.
While it may have chaffed a few of the aforementioned speakers, it was a response rooted in reality by someone who has been through countless economic cycles and knows how quickly things can change either way. No one would deny the importance of data and the transparency that’s come to the industry over the past decade, thanks in large part to Smith Travel Research, particularly when it comes to forecasting. However, we need to know our limitations.
There are concerns about supply ticking up in the industry, but while lenders have loosened up financing to some extent, it remains a conservative lending environment by pretty much any measure. I don’t think we really need to concern ourselves with overbuilding just yet. In fact, any significant spike in supply likely wouldn’t occur until 2015 at the earliest, and more likely 2016.
Of course, there are economic headwinds, such as the impact of government sequestration and a weakening of global markets, for example, but isn’t that really just part of life now? When was the last time we were in a period of economic growth with no real cause for concern. You’d have to go back a few decades. The bottom line right now is that the industry’s fundamentals remain solid and consumer confidence is on the rise.
Corcoran further noted that we’ve experienced 40 straight months of RevPAR growth, and we should enjoy it and I have to agree. After all, let’s have a little perspective here. It was exactly five years ago at the Lodging Conference that the announcement came that Lehman Brothers had collapsed sending the industry, and the country, into a great recession. All things considered, we’ve bounced back pretty well from that devastating turn of events.
Fortunately, the mood of this year’s conference was far better, generally upbeat despite some of the previously mentioned issues. This event has always been known as a deal making event, and we’ll know in the coming weeks and months if there were in fact real deals being discussed or just more of the same. But either way, the buzz of activity in the lobby of the Biltmore is always a comforting sound.
One of the questions I heard often during the conference was an industry favorite, ‘what inning are we in?’, which is quite appropriate as we head into October and the Major League Baseball playoffs. Nevertheless, my advice is to forget about what inning we’re in and let’s just keep scoring runs.
Tags: Lodging conference • Hospitality •
When you hear all the lodging industry projections for the months and years to come, much of the robust growth is forecast to be the result of the expected influx of travelers from China. In what could only be seen as good news for the industry, that expectation moved a little closer to reality when President Obama signed a visa waiver extension for Chinese travelers earlier this month.