Downturn Has Taught Real Lessons This Time, But Better Times Are Ahead

We’ve all heard the expression “what doesn’t kill us makes us stronger,” and it certainly applies when it comes to the trials and tribulations that our industry continues to face. However, I wish when Friedrich Nietzsche uttered these words for the first time, someone could have whispered in his ear suggesting he replace “stronger” with “smarter.”

During a recent HOTEL BUSINESS® Executive Roundtable, the question was posed, “As an industry, have we learned our lesson?” The consensus of all queried was nearly unanimous: “Probably not.”

While I was hoping for different feedback from this group of C-level executives, I have to admit I wasn’t totally surprised. I understand the adage that developers are going to develop, lenders are going to lend and so on. However, it just seems to me that the casualties related to this downturn seem to far outweigh the ones realized during other downturns. Furthermore, there’s still some heavy lifting to do before we turn the corner on this. To be sure, at least some lessons have been learned this time.

Nevertheless, it has been widely speculated that hotel industry performance levels have hit bottom and are likely to remain fairly static for the next 12 months or so. If so, that makes 2010 a time for many to prepare for 2011 and beyond. In fact, a few of the individuals included in this issue’s cover story “10 To Watch In 2010,” have suggested that this coming year will be used to solidify operations at the property level, including increasing guest satisfaction as well as sales. Such strategies would put their respective companies in the position to realize success once the projected upturn in business begins to take hold late next year.

Marriott International’s president and COO, Arne Sorenson, said, “It will be about fighting tooth and nail for every bit of business, making sure we’re serving our hotel customers as well as we possibly can—that we’re calling on them with our sales forces as effectively as we can.” He also added: “Through those efforts and through promotional activity, Marriott Rewards, and all the other tools we use to drive business we’ll focus on continuing to take market share.”

On the transactions side of the business, Michael Medzigian, chairman and managing partner of Watermark Capital, told HOTEL BUSINESS® that he sees his company ramping up its activities during the next few months. He also suggested that this will be the case for the market in general. “We’re kind of at that tipping point where we’re going to see a lot happening. Part of that is a lot of these assets have been taken back by lenders. I’ve had a belief that things wouldn’t really start happening until the regulators started pressuring some of the lenders on what’s in their portfolios. I think we are seeing signs over the past few weeks that some of that pressure is really starting,” he said.

Although a few of the viewpoints differed on many of the points covered, there was indeed one constant reflected by all 10 of the industry leaders profiled, as each relayed, with an air of confidence, (albeit on varying timetables) that better days are indeed ahead for the hotel industry.