ATLANTA—While many movers and shakers here at the 29th annual Hunter Hotel Conference acknowledged a shift downward in the industry’s continuing robust performance is inevitable, there was no apparent sag in confidence that industry fundamentals would remain strong in the near term while owners and developers maintain a steady pace of buying, building and renovating hotel projects.
Founded and organized by locally based Hunter Hotel Advisors, the three-day event being held at the Marriott Marquis Atlanta has drawn a wealth of hotel owners and investors from 40 states and five countries to get a read on the current lodging real estate and finance landscape in an environment changed by increasing interest rates, more consolidation, more brands and competition, and the overarching influence of a new government administration.
Owners confidence is as strong as it was last year, said Bob Hunter, CEO of Hunter Hotels, who co-chairs the conference with his son, Lee, the company’s COO. “Last year, 61% of the hotel owners in this room told us they plan to develop a new hotel in 2016. This year, our survey shows 60%—statistically the same amount—of owners here today plan to develop a hotel in 2017. That shows a high degree of confidence in our industry.”
In addition, 92% of attendees at this year’s conference indicated they planned to finance something in 2017 compared to 85% last year. “Maybe this is why there are 89 hotel lenders in the room today,” quipped Hunter. “They want to talk with good borrowers about lending money on good projects.”
From his perspective, Hunter said, “Market fundamentals remain strong. There’s an abundance of capital ready to invest; however, there’s a very wide bid-ask spread between buyers and sellers,” which, he felt, needed to be worked through.
Bringing their perspectives on the industry, CEOs on the opening session’s President’s Panel included Keith Cline, La Quinta Inns & Suites; Dave Johnson, Aimbridge Hospitality; Jim Merkel, Rockbridge; Greg Mount, RLHC; and Lance Shaner, Shaner Hotels.
In a snapshot poll, the panelists were asked to give their responses to the following:
At this moment, my take on the U.S. hotel industry is:
A. Pretty darn good. I wouldn’t change a thing.
B. Meh. There are good days and bad days. Just have to stay on top of it.
C. Hmm. I’m mulling my options and have my broker on hold.
D. Yikes. I’m getting out and heading for the doomsday bunker.
With 888 hotels open and operating and 240 in the pipeline, La Quinta’s Cline opted for staying on top of it. “A strategy to do nothing is a strategy to lose, and the way that we win in this industry is by beating the competition each and every day on every street corner,” he said.
“I think it’s a great time for the industry,” said Johnson, going with the first choice. With many brand products represented by Aimbridge’s 70,000 rooms, he added, “I think we’re a little bit frustrated because most of the brands are public companies and we’re forecasting 2% to 3% RevPAR growth coming off of five or six years where we’ve had 7% to 8% growth. So, there’s a little bit of a doomsday attitude out there. But I think in most industries 2% to 3% top-line growth would be very satisfying. There’s a little bit of supply concern.. I don’t think I’d say I wouldn’t change a thing, but I’ll go with A.”
Like Cline, Merkel went with the second choice, noting from the investment company’s point of view “things have settled down and the industry reforecasted late last year forward revenues to grow slower. I think it’s just the law of numbers; at some point it’s got to slow down the pace of growth. It’s still healthy but you’ve got to stay on top it.”
With some 1,200 hotels, RLHC’s Mount concurred, noting, “If you asked me this question pre-election, it might have been different, but right now you’re seeing unemployment considerably lower than it’s ever been—down around 4.7%—and seeing discretionary spend out there that we haven’t seen in a while.”
Shaner, with 50-plus hotels and eight under development at his privately held namesake company, joined Johnson on the optimism front, checking off A.
Rob Torres, industry director of travel for Google Inc. painted a picture of “The Future of Travel Booking” for the audience, highlighting several initiatives the search conglomerate is investigating.
With the rise of voice-activated personal machine assistants, Torres noted the next big shift in how people accomplish a task-filled schedule would center around so-called “machine learning,” the ability of a computerized assistant to aid with chores, including planning travel and destination activities and experiences, based on cumulative data and preferences.
“Technology has truly changed travelers’ behavior and how they plan and purchase travel,” said Torres, noting consumers who once relied on sources such as travel agents to gain knowledge are now largely doing it all themselves. “The digital world has changed everything. In the digital world, the average hotelier has ten times more digital touchpoints than [he/she] has physical touchpoints,” added Torres.
He noted Google is looking to apply its expertise across all levels of the travel journey: dreaming (about the trip), researching, booking, experiencing and sharing. “We’re really trying to apply machine learning to all of those areas,” said Torres.
—Stefani C. O’Connor