HB ON THE SCENE: The Lodging Conference—Positive Vibe Still Permeating Industry

PHOENIX—Amid talk of headwinds and tailwinds blowing over the lodging industry, the overall tone of conversation is remaining positive here at The Lodging Conference (TLC).

The largely upbeat attitude is being buoyed by a record-breaking crowd of some 1,800 at the 22nd annual event being held at the Arizona Biltmore, A Waldorf Astoria Resort, with a notable number of first-timers joining the traditional ranks of hospitality-universe movers and shakers.

“This capacity crowd tells me this break for our lodging cycles has a lot of road left to go,” said Harry Javer, producer and cofounder of the conference, riffing off its theme of “Enjoy the Ride.”

From Think Tank sessions to networking receptions and the Frank Lloyd Wright-inspired hotel’s jam-packed public spaces, the outlook by hospitality and financial executives heading into 2017 still sees a lot of runway ahead to get deals done and be profitable.

However, Javer noted, how okay/good/great business is depends on the measuring stick being used.

“If we compare this year to 2015, it’s kind of a tough measurement since 2015 was such an outstanding year in so many different ways, with so many records broken in this industry. But if we look more historically, then 2016 will shape up to be another great year for the industry. Certainly, deal volume is down, capital markets have had their issues, but fundamentals remain solid,” he said.

Javer cited “powerful trends” that would help keep the industry’s engine running in the months ahead.

Among them is the continued increase in travel, driven by more free time for baby boomers as they retire; the attitude of millennials to acquire experiences rather than big-ticket items; a rise in household incomes and an increased amount of disposable income being put toward travel; technology and globalization helping to “shrink” the world via the internet and cell phones; and—airport lines aside—a greater convenience to travel, particularly via automobile, e.g., car sharing and cheaper gas prices.

“These are all very good trends that will keep people traveling,” said Javer, who, in the same breath, indicated the rosy outlook had some clouds.

“To begin with, just because more people are traveling doesn’t necessarily mean they’re going to stay in hotels. We have competition from home-sharing services like Airbnb; that’s not going away. We have a love/hate relationship with the OTAs. We have social media sites that we constantly have to monitor for bad reviews. These are some of the challenges of technology.”

On the operations side, the executive pointed to the costs of doing business. “It’s getting more expensive to run a hotel: Labor costs are going up, construction costs are going up, the cost of capital will definitely be going up,” he said.

Also in the obstacle mix are cyber-terrorism, the threat of terrorism and uncertainty.

“But despite these obstacles, remember: 2015 was the second most profitable year ever for this industry and 2016 will not be far behind,” said Javer.

—Stefani C. O’Connor