A new lease on life
And so it has, fortunately creeping in “on little cat’s feet” like the fog in Sandburg’s haiku. And despite the presumably unscaleable divide between 1% and 99% of the people, we have all been forced to endure and now consider how to move forward. Where cranes stood on every street corner, now empty and tired buildings ring with the sounds of remodeling within. America rebuilds.
Our travel numbers, as surefire a barometer of economic health as the “thermometer” of the Fed, had dipped to historic lows and have now risen to “normal.” If we have not yet returned to those feverish days before the crash, let us remember that fever is not healthy for the patient, but that the intense heat may be the onset of a long cold.
So with our building stock worn down by these 40 months, which seem like 40 years in the economic desert, how do we reach the promised land? Cap rates are low, but capital is playing hard to get. Room rates are low, but customer expectations are high. We pride ourselves as a nation built on thrift, though we lived — and nearly died — on conspicuous consumption (tubercular pun semi intended). Is there a path to rejuvenate our building stock even before our stocks lift us back up from the penury they imposed upon us?
We have seen the shakeout. Properties lost to foreclosure, or, even worse than passing into new hands that at least have a basis that makes sense, left in debt default limbo with those bankers continuously looking in the rearview mirror while listening to the traffic report and going nowhere. But the anticipated “tsunami” of commercial foreclosure never arrived, and those surfers of rough waters hoping to catch a big one have settled into more ordinary patterns of acquisition and restructuring.
So, finally, capital — tossed, lost, tossed again — returns to the task of building and rebuilding, with newly acquired and now soundly recapitalized properties demanding investment in the physical side, like a man or a woman after a divorce shopping for a new outfit for that first big date so as to put the past firmly behind him or her.
So what makes sense today, say for a hotelier of an ordinary property with four years of deferred maintenance and refurbishment? Ironically, although our means to pay eroded over these last years, our fascination with the latest and the greatest — the 1% lifestyles and the media glow that amplifies them — has grown. How do we capture those wandering eyes that may be bigger than the pockets that attend them?
Infrastructure, the most logical choice, perhaps is the most illogical. Perhaps this occurs to me because I have not booked any hotels personally that advertised their roof repairs or rewiring. In an industry encapsulated in an aphorism, “heads on beds,” what most will entice our guests to click on “book”? It would not be unwise to look around at human behavior in other sectors, and the newly single divorcee’s new outfit is more apropos than it might seem, because it is not only a reach for beauty but reflective of a belief in love, without which no future relationship has a chance.
So the “cosmetic” redo is hardly the light touch-up, the sheep’s clothing for the wolf. Perhaps cosmetics as an industry can teach us the essential nature of cosmetic things, having as a market sector withstood the downturn better than finance, real estate, agriculture, manufacturing or any other staple of the American economy. And like with that new outfit, there is a profound desire to put the past behind us and look forward. In fact, design has changed over these 40 months that the world presumably stood still. We not only have proximity readers, we have an approximate sense of survival, and the exhilaration that comes with a sense of having been to hell and back, of stepping down from the cornice and gazing into a new dawn.
This newfound joy, if that is not too ebullient a term, gives us a sense that we deserve good things, that we should treat ourselves — and be treated — well. If there is a measure of living every day as if it is your last — because we feel like we have seen that possibility — and if there are seeds of the next fever and its ensuing denouement (better left for the future and a future column), so be it. The hotel guest who walks into the lobby or peruses our website is not the customer of 2006, 2007 or early 2008. I suggest that this guest is not so much seeking the latest and the greatest, to acquire points in bar room braggadocio, but seeking a reward with the sense of having earned it. In this context, it is perhaps no surprise that the luxury sector of the hospitality industry has revived the most. It is not solely the return of the luxury customer, who in fact never really went away (actually they went away all the time), but the “sector creep” of customers who having vaulted the hurdle of “travel or not” now seek a qualitative experience that encompasses both the new and the consequential.
So, onward to the future. Life begins at 40 (months).