Live from ALIS

Live from ALIS

If the attendance and energy levels at this week?s Americas Lodging Investment Summit in Los Angeles are any indication, there is at the very least some optimism about the year at hand and the level of business activity one can expect moving forward.

Some 2,500 attendees (no gate crasher/lounge lizards allowed at the JW Marriott LA Live) have descended for the first big industry event of the year. It is still hard to make out if the second year of the U.S. hotel recovery is for real or the result of sheer will and cheap rooms that the big brands hope at least become less expensive with the launch of it own OTA, Room Key.

Publicly, and in the numerous brand interviews I do here, mostly middle-aged white men talked about how pipelines are moving slowly ? not quite stuck in molasses, but moving where financing still exists. Cap rates are ticking up, and buyers and sellers are expected to be more active as the deleveraging of assets slowly unfolds. Performance in the United States is expected to improve ? not at last year?s levels, but improve nonetheless. We shall see how the numbers hold up in the second half of 2012 when the comparisons become much more challenging to meet and exceed.

I particularly enjoyed Hyatt CEO Mark Hoplamazian?s insights about how his company is responding to serious demographic and psychographic shifts by putting the hotel product in guest?s hands to use as they wish. He referred to the Andaz brand as Hyatt?s response to the change, and said operators still need to push much further with how hotels are presented and used in this era of ever-growing customization.

The highlight of the Monday sessions at ALIS came when real estate icon Sam Zell and hotel legend Bill Marriott ? forever in his signature Marriott red tie ? sat side-by-side to answer questions about everything to building company culture to the upcoming U.S. presidential election.

After talking about their passions for driving their company cultures, the discussion shifted to U.S. politics, where Zell was particularly outspoken about the damage the Obama administration has done to the U.S. economy. ?The biggest risk we face is the re-election of President Obama,? he said.

Zell referred to the ?frightening irresponsibility? of wasting trillions of dollars in stimulus, as well as to the limited solutions being applied to the over-extended real estate market. ?Staying liquid equals value,? Zell said.

Bill Marriott chimed in complaining about unemployment, intrusive government and aggressive unions that are further exacerbating difficult trading conditions.

On a more positive note, Zell referred to the lack of new supply aiding occupancy. However, he added that rate will remain hard to move until the economy starts growing again. Based on where things are today in the United States and Western Europe, Zell didn?t seem to optimistic about the near term.

Of course, that has pushed his development efforts to India and Brazil, among other global markets, where there are emerging and upwardly mobile middle classes, scale and self-sufficiency. Indebtedness is 8% in Brazil; about 85% in the United States. Draw your own conclusions.