Drinking the Kool Aid, finally

Drinking the Kool Aid, finally

I have had a hard time believing the economic recovery is for real, especially as I see no change in unemployment data and as residential real estate prices keep sliding in most markets. But today, as I sit here and read prediction after prediction about the positive signals, and do interview after interview with bullish hoteliers, I am going to give in and start letting the bulls influence my point of view.

The recovery in the U.S. hotel sector will continue in 2011 and begin to accelerate in 2012, according to a new analysis from CB Richard Ellis Econometric Advisors (CBRE-EA). CBRE-EA forecasts that RevPAR for “full service” hotels will improve 1.6% over the next year and 4.4% over two years.

Writes CBRE-EA Economist Abigail Rosenbaum: “The significant growth of room rates over the next couple of quarters, combined with continued occupancy gains, will bring RevPAR levels closer to their previous peak in 2007. It will take slightly longer than in earlier recoveries, but we expect that by 2014 both full-service and limited-service RevPAR will be expanding.”

American Express Global Advisory Services has already seen an average increase of more than 7% in corporate rates worldwide this year for 2011 business travelers.

Finally, traction in major metros is taking hold, or at least operators are finding the nerve to be tougher negotiators, knowing they now have a bit of muscle to move the rate bar.

Joop Demes, CEO of Pam Golding Hospitality in South Africa reports that both the Cape Grace and One&Only hotels increased occupancies by over 45% last month compared to November 2009. Furthermore, the Cape Grace?s November 2010 occupancy was the highest for any month since 2002.


PKF sees growth and Jones Lang LaSalle sees the deal pipeline heating up. New hotel companies are being started by the likes of Ian Schrager and Richard Branson.

Ok, I am starting to drink the Kool Aid and believe there is a window of opportunity. The question is how long will it last. I know, not an easy question to answer in today?s uneven global marketplace, but go ahead and take your best bet. Tell me what you think?