Wednesday February 6th, 2013 - 4:59PM
Anyone who has attended the last several ALIS (Americas Lodging Investment Summit) events can likely recite the phrase “cautious optimism” in their sleep. That’s been the takeaway for the last few years. I’m happy to report that in describing the mood of this year’s recently concluded conference, the word cautious can be eliminated altogether. In fact, the mood was borderline euphoric as the majority of executives offered bullish views of 2013 and beyond.
You could look at the attendance of the event, nearly 2,500 delegates—the third highest in the history of ALIS—as a positive indicator. You could cite the multiple forecasts of occupancy and RevPAR growth in the high single digits from the various research firms such as Smith Travel Research, PKF Hospitality Research, etc. You could look at an increase in deal activity both during the conference and in the days leading up to the conference, including several portfolio transactions.
However, the best evidence, in my opinion, that we may finally be on the road to a full recovery comes from my conversations with a number of owner/developers who told me that lenders are starting to call them in search of new opportunities. What’s more, generally speaking, the terms seem far more favorable than in recent years and will, ultimately, make deals far easier to pencil out for owners. The fact is nothing has been more emblematic of the industry’s stagnation for the last several years as the lack of available financing.
Many would argue—and I would agree—that stagnation was a good thing as it kept supply and demand fundamentals in line and it’s precisely those solid fundamentals that have generated the bullish predictions. Nevertheless, sooner or later, whether it’s building or buying, new product needs to drive the industry’s growth.
However, the industry knows all too well that it doesn’t take long for optimism, cautious or not, to morph into skepticism or even fear. We know the importance of emotion and perception in the business world. Nowhere is this more evident than in the stock market where both rallies and freefalls are often the result of the most trivial of news items.
With any luck, the momentum of this conference will be enough to make investors, and all key decision makers for that matter, follow through when it comes time to sign on the dotted line. The fact of the matter is whether it’s a fiscal cliff, a presidential election or the economy in Greece, in today’s global economy you can always find a reason to maintain status quo and hedge your bets. But playing it safe comes at a price too, and the cost could be the lost opportunity of potentially profitable investments.
I’m sure many of you remember the earlier years of ALIS when it was held at the Hyatt Century Plaza in Los Angeles, and the nearly deafening roar of conversation that could be heard as you entered the lobby of the hotel. Particularly because the hotel hosted the event during many of the peak years for the industry, it was unmistakably the sound of deals getting done. Granted the acoustics at the event’s new home, the JW Marriott at LA Live, are not quite the same, but if you listen closely, you can hear that roar coming back.