LOS ANGELES—The view of the lending landscape at the 28th annual Meet the Money National Hotel Finance & Investment Conference, held here at the Hyatt Regency Los Angeles International Airport, was one of optimism with a healthy dose of caution.
“A constant theme was ‘steady as she goes’ to describe the industry prospects,” conference organizer Jim Butler, chairman of the global hospitality group of Jeffer Mangels Butler & Mitchell LLP, told Hotel Business. “Speaker after speaker said that [it may be] at least two more years before the cycle ends. We see continued profits, modest RevPAR growth and many properties and markets outperforming.”
Suzanne Mellen, senior managing director and practice leader, San Francisco, for HVS, as part of a special presentation on the current economic situation, summed up what many view as the outlook for the industry. “The big picture commentary right now is that things are sunny and looking up for the industry as the impact of the favorable economic fund starts to play through the performance of hotels,” said. “Some of the first-quarter numbers for our industry have been very, very strong. As we all know, GDP growth has been going up, and that is just great for our industry. Capital is starting to lean back into our market now, and some brokers I spoke to said the pendulum had swung after a relatively muted 2016 and 2017, following a record year of transactions in 2015. I see hazy skies ahead… because we don’t really know what the outlook is for two years from now. We are all trying to remain positive on this great long run.”
Butler also had a one-on-one interview with Eric Danziger, CEO of Trump Hotels, on a range of topics, from growing up in the hospitality industry to running a company with a very polarizing name, to the challenges facing the industry. One of those major challenges is attracting top talent into hospitality.
“I don’t care if it is a 100-room hotel, 200-room hotel or 2,000-room hotel, this is the business of hospitality,” he said. “It is a piece of real estate, but it is the business, which is executed with great pride and service. That has to be provided by employees—both hourly and management—that are motivated, excited, thrilled and truly service-conscious, and we don’t have a lot of those anymore. Here you talk about all this growth, but it needs to be staffed, not just by a body, but by great, capable, competent, enthusiastic people.
“So the challenge to me is to continue to be a successful business enterprise, you better find great people, make this an appealing business for them, make great career paths for them, recognize them, reward them, respect them and create this as an industry of great choice,” he continued.
The labor issue was a thread in a number of the industry presentations. “One of the biggest challenges to the industry is labor—talent retention and rising labor costs,” said Butler. “Slower growth and market challenges make union issues critical to profitability—remaining union-free if you are now, and fighting for reasonable terms in union negotiations where you are unionized. It is time to negotiate hard on neutrality agreements.” HB