ATLANTA—Economic experts and industry insiders gave attendees of the 28th annual Hunter Hotel Investment Conference, held here at the Marriott Marquis Atlanta, a number of reasons for optimism and continued growth due to solid industry fundamentals and the overall economy.
As the U.S. Federal Reserve just maintained its benchmark rates, Anika Khan, director and senior economist, Wells Fargo Securities LLC, indicated that the hotel industry would have room to grow this year. She underscored the slow growth rate of the GDP since the beginning of the recovery seven years ago.
“Hotel demand is closely correlated to GDP growth,” she said during the session titled “2016 U.S. Economy & The Lodging Industry.” “Any increase in rates is a boding confidence for economic growth.”
As labor market conditions improve, consumer confidence is growing especially for leisure lodging demand, suggested Khan. She added, “Income growth has finally begun to turn around but still lags prior recoveries.”
Looking for signs of the next possible downturn, panelists of the President’s Panel indicated strong fundamentals for the next 12 months. “We’re coming off four robust years of growth,” said Dave Johnson, president & CEO of Aimbridge Hospitality. “We’ve been focused on transactions and new development. Fundamentals for 2016 and 2017 still look very healthy.”
In the interim, hotel owners should focus on making technology, renovation and guest experience investments to their properties a top priority, suggested Elie Maalouf, CEO, The Americas, InterContinental Hotel Group (IHG). “It’s a good time to put yourself in a position before things might slow down,” he said.
Looking beyond the current peak in the cycle, Steve Joyce, president & CEO of Choice Hotels International, anticipated healthy growth through at least 2018 as some markets are increasing in new supply.
“Supply and demand balance has never been this good this late in the cycle,” he said. “From our view, this is a great time to [make investments]on projects through 2018 to satisfy your guests. At some point, things will slow to a more normal rate after 2018.”
During the State of the Industry panel, executives noted increased opportunities for select-service properties in urban, gateway areas targeting foreign travelers as well as disruptors to the hotel industry.
“From our perspective, the market is strong,” said James Merkel, CEO of Rockbridge, which owns select-service properties throughout the U.S. “The underlying fundamentals are still sound. These times of change create a lot of opportunity for us.”
Commenting on the rise of Airbnb, Tyler Morse, CEO of MCR Development, indicated that the rental lodging listing would eventually become another distribution channel like an OTA. For Airbnb to continually grow, it would have to increase its commission rate similar to Expedia, he added. “Airbnb is not a factor in suburban New Jersey or the suburbs outside of Denver,” he said. “It just doesn’t matter.”
During the panel, Brian Kim, managing director of real estate for Blackstone, announced the company’s sale of Strategic Hotels & Resorts to Anbang Insurance Group. The deal had not yet closed.
Referring to Anbang Insurance Group’s proposed offer to acquire Starwood Hotels & Resorts, guest speaker Terry Jones, chairman of WayBlazer.com, emphasized the impact of disruptors to the lodging industry.
Bob Hunter, co-chair, Hunter Hotel Conference, underscored the recent changes to the industry as part of his opening address and how executives would adapt to change. “Things…they are a changing,” he said.