Let’s call the state of affairs in the U.S. lodging industry at last week’s Lodging Conference partly sunny. We’ll wait until this week’s conference — if it’s early October, it must be Hong Kong in the never-ending wave of global investment conferences — to see if the forecast changes yet again.
According to attendees at last week’s conference at the iconic Arizona Biltmore, business in the United States continues to grow, albeit at a slower pace heading into fall. The sea of franchisors and brokers trying to add or sell properties still feel a bit stymied in search of better economic fundamentals, grumbling about the lack of financing and the “pretend and extend” scenario being played out for troubled assets.
While the deal and development spigot is flowing with a bit more vigor, it is far from gushing the way some people hope for. However, do we forget that the trickle on the development side is helping keep fundamentals strong? Of course we do, as the dealmakers and brands will not be satisfied until they can boast strong new pipelines — whether we need the new inventory or not.
Much of the talk in the hallways surrounded the upcoming U.S. presidential election, and I don’t have to tell you who this crowd wants to see occupying the White House come January. There is fear a second term for Obama will create more taxes and spending not in the best interests of the hotel business. Of course, most every U.S. business conference has an attendee base with a Republican Party bias, so there were happy bar patrons later Wednesday night after the first debate was called in favor of Mitt Romney.
Other than the buzz around the election, it was more of the same from this reporter’s perspective. It is nice to see positive data continue to flow, and there is no indication — no matter who wins the White House — this nice trend should abate much in 2013. Comps will become tougher to match, but there was an expectation at this event that both business and leisure traffic will be strong next year.
Of course, there is always the fear of the unknown generating a bit of paralysis, and at this conference there were mutterings about Iran and concerns about more violence in the Middle East that would send oil prices soaring. But lacking any control over that situation, the industry is going about its business, having the usual discussions about repositioning brands, the new roles technology will play, its usual OTA angst and the continued casualization of operations.
In fact, Hilton’s F&B leadership showed me new restaurant concepts for Embassy Suites, core Hilton and Doubletree — and all three were limited-service, fast-casual concepts that reduced F&B’s footprint and cost structure and were more in keeping with broader trends. They made sense to me and should prove more attractive to developers who have to spend more and more on technology and guestroom amenities.
There were also some side discussions about a white paper from an asset-management firm that concludes Expedia’s new Traveler Preference Program will reduce profits for hotel owners by US$42 million. Before HOTELS reports on this assertion it is getting feedback from owners, operators and Expedia. Expect more on this shortly.
Throughout this week I will offer you more from my Lodging Conference notebook. Today, though, the bottom line from my perspective is steady as she goes through election season and the holidays, barring any major catastrophes, and 2013 could deliver more of what the U.S. industry has seen in 2012.
And by the way, good luck substantially driving rates, because I still don’t think the consumer or meeting planner are ready to accept them. However, I do not profess to have a crystal ball and can only hope calm and peaceful heads prevail on the world’s political stage to make 2013 another positive year in the U.S. hotel industry.