PHOENIX—Despite some concerns about a slowdown in the world economy, particularly with regard to China, the vast majority of executives at the 21st annual Lodging Conference continued to express confidence that the current level of performance will not abate anytime soon.
Bernard Baumohl, chief global economist, The Economic Outlook Group, noted there will be a significant decline in world GDP growth to about 3% in 2016. However, he maintained there is not much cause for concern for U.S. hoteliers.
“Can this jeopardize the U.S. economy in the next year or two? Could we see a downturn as a result? My answer to that is a firm no,” he said, adding he expects the U.S. economy to grow at roughly 2.5% on average over the next three years.
He further noted, “We don’t see any of the typical stress points that normally would foreshadow a recession. What that does is it elongates the whole business cycle. We’re probably smack dab in the middle of that cycle, and we have a couple more years of growth ahead of us.”
Simon Turner, president, global development, Starwood Hotels & Resorts Worldwide, however, did acknowledge the impact of global markets. “China obviously was a huge engine of growth; it’s a different feel today than it was a year ago. The economies that are driven by Chinese growth will obviously be impacted,” he said, adding the strength of the U.S. dollar has affected inbound tourism as well.
“When it comes to the U.S, we feel pretty good. The fundamentals just feel really solid. There may be a black swan event out there that’s going to impact us, but on the whole, in our conversations with our hotels and our owners, people feel like we’ve got a good couple of years ahead of us,” he said.
As such, executives weighed in on the prospects for growth, particularly ground-up development, going forward. “As far as new supply goes, we’re building hotels at Vantage. We clearly see locations that we want to be in where it doesn’t make sense to do a conversion. Timing is important right now, and we see two or three years of good building [ahead],” said Roger Bloss, president and CEO, Vantage Hospitality Group, who did acknowledge a spike in construction costs.
Liam Brown, president, U.S. & Canada select-service and extended-stay lodging and owner & franchise services, Marriott International, Inc., offered his assessment of growth prospects. “Our business is a cyclical business. None of us have a crystal ball,” he said. “All you can do is look at the current fundamentals. What is the data showing? We never see the obstacle coming because we’re always driving through the rear-view mirror in terms of statistics. Looking at the next 24 months, I think we’re fine; after that, who knows?”