Posted 1/28/2010 - 3:41:20 PM
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What are these?
SAN DIEGO—The power of positive thinking was clearly on display here at the recent ninth annual Americas Lodging Investment Summit, which was held at the Hilton San Diego Bayfront hotel. Attendees want to believe the industry is finally heading in the right direction, they want to transact and invest again and they want “normalcy” to return to their businesses and properties.
But try as they might with their optimism, wishing the return of operating and investment profits won’t simply make them come true. There’s still much in the way of recovery to do. And so, according to many of the executives speaking and presenting at ALIS, everyone’s going to have to maintain that wishful thinking a bit longer, as fundamentals won’t get back on track until at least the end of 2010.
“It was an awful year for everyone globally in 2009,” explained Mark Lomanno, the president of Smith Travel Research, during ALIS’ opening session. “RevPAR was down to unprecedented levels in the U.S. And what’s disturbing and lingering is the continued decline in group ADR. It hasn’t begun to turn positive yet. And despite the financial challenges, supply has been stubborn and hasn’t begun to slow down like we thought it might. Fifty thousand rooms went into the ground in 2009, plus fewer rooms are closing compared to previous cycles. There also hasn’t been any demand growth since 2006 actually, which is troubling. The industry sells 215,000 less rooms now every day. So everything will take a while to come back.”
Lomanno further noted that rate pressure will continue to exist well into 2010 because hoteliers are reluctant to begin an aggressive pricing strategy again. “There’s no rate leader,” he said. “Everyone wants to be the same as their competitors.”
But Lomanno did leave the stage with some encouragement for looking for what ALIS presented as the theme of the conference: light at the end of the tunnel. “Two thousand and ten we think will be way better than last year,” he declared, “but it will be 2011 before we all see meaningful improvement.”
