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HB ON THE SCENE: Optimism Reigns at ALIS

Wednesday January 23rd, 2013 - 11:25AM

LOS ANGELES—The mood is definitely upbeat among executives attending the annual Americas Lodging Investment Summit (ALIS) being held here this week at the JW Marriott, mirroring data and opinions that have the industry headed in a positive direction.
Unlike last year’s conference, which seemed intent on forcing a rebound by sheer will and an emphatic theme, the event’s twelfth iteration had chairman James Burba, president of BHN, declaring “On with the Show” an apparently more apt approach.
The mood, he indicated, recalled that of 2004-2005, which led to extremely robust times for the industry. Another barometer was the number of attendees, approximately 2,500, the third largest attendance in ALIS history.
Burba noted in a survey sent out to ALIS attendees, 98% of respondents believe there will be an increase in RevPAR growth in the United States this year. In a similar survey, 65%-70% of those surveyed in Asia Pacific felt RevPAR growth would increase. A European survey is still under way but Burba felt it wouldn’t be a surprise if it mimicked the Asia-Pac sentiment.
“I would think it’s safe to say the U.S. lodging market, the U.S. investment community [are] the poster child of good news right now as you deal with major markets around the world,” said Burba.
In addition, 85% of respondents as opposed to 56% last year felt there would be more construction dollars this year. “So clearly, the feeling that development’s coming back is what we all have,” said Burba.
REITs and opportunity funds are expected to be the major investors in the lodging space in 2013. “That’s a healthy sign for the industry because it means capital from more than one source is going to be chasing deals,” said Burba.
As part of a panel focused on industry performance, Randell Smith, chairman of Smith Travel Research, noted globally the Americas enjoyed “two years, back-to-back of really solid RevPAR growth.”
He tagged the RevPAR increase for this year at 5.7%.
Indeed, many of the panels and sessions, which were split along three paths—small property investment, ownership issues and opportunities and value-engineering strategies—had as their focus achievable strategies and tactics that could produce slow-but-steady progress as well as profit in the still-recovering economy
Among those discussing the outlook for lodging was a panel of executives giving their “View from the Boardroom.” These included Stephen Joyce, president/CEO of Choice Hotels International; Mit Shah, CEO, Noble Investment Group; Jim Donald, CEO, Extended Stay Hotels; and Robert Gaymer-Jones, CEO of Sofitel Luxury Hotels.
Scott Berman, principal of PricewaterhouseCoopers, moderated the panel.
For the most part, the discussion found the panelists believing the industry was seeing traction.
Donald said he was “very bullish” on the industry in 2013 and felt there is “opportunity,” in particular, for the brand.
Noble Investment’s Shah said looking out to 2013, “we put a lot of stock in the RFP process of getting real rate creep, something that’s been a little bit of a mixed bag. While there are fewer RFPs that have been unsigned as opposed to last year, I still think there’s going to be some give and take with businesses. It’s all market by market in how we’re doing this…we want people in our hotels to take risk [in terms of pricing] because that’s where the momentum is going to come from.”
Joyce said Choice expected to do well in 2012 and “actually did a little better than the industry,” with a lot of leisure customers coming back. With the strength of that, Joyce felt “barring something unforeseen, we should have a pretty good year” in 2013.
Gaymer-Jones suggested some of the ills the lodging industry is experiencing, both in the U.S. and abroad, is “not really a hotel issue, but a government issue.
“The government is a mess and the taxation is changing all the time, creating problems for individuals and issues for businesses,” he said; however, he indicated 2012 was a “great” year for Sofitel, which experienced “it’s highest single-digit growth in RevPAR around the globe,” with “a lot of it driven by rate…in the majority of our locations around the world our rates are up where they were in 2007. So that’s a positive message.”—Stefani C. O'Connor