Optimism for the hotel industry

Optimism for the hotel industry

One of the bright spots at Steve Van’s Fishing for Solutions lender conference was the keynote address given by FelCor Lodging Trust Chairman Thomas Corcoran. Known for his blunt and sometimes salty candor, Tom sounded a call for a reality check for doomsayers and said he likes where we are now in the hotel industry and expects things to get better.

Yes, he reads the newspapers, knows all about the “market volatility” and pokes fun at how the world cringes on reports that Slovakia may not approve the European bailout of Greece. Everyone is overreacting to news, he said. 

Noting the recent dive in stock values, Corcoran observed that the public markets are not optimistic about the hotel industry. But, he said, “You have to feel good about the Smith Travel Research numbers and projections for 2012, if they are real. I think the year will turn out a lot better. We will continue to see general improvement.”

Corcoran acknowledged that there is a lot of uncertainty out there. But compared to a year or two ago, deals are getting done.

He had high compliments for the special servicers in attendance, saying, “This has not been kick the can down the road. The lenders are extremely bright. They adopted an approach that has gotten a lot more money for their stakeholders.”

In looking back, Corcoran thinks that people will say most of the lenders were very smart and avoided the mistakes of the past. And Corcoran believes that people are going to look at hotels as a good place to get a better yield, so we will see money invested in our industry in 2012. 

Here are a few more of Corcoran’s observations:

  • “The public markets keep predicting doom and gloom, but they keep getting it wrong. There is such a disconnect between the markets and reality that they keep getting it wrong, and they will this time too. I don’t think the doom-and-gloom scenario is very likely.” 
  • “There is so much overreaction to any negative news, like what Slovakia will do on the Greece situation.”
  • “The one thing we cannot control is the public sentiment — how people feel. People act on their perceptions. If they feel good, they do more.”
  • “This pattern of slow recovery discourages stupid money and stupid investors. That is good for us in the hotel industry.”
  • “If you are in the business and you take opaque reservations, you are an idiot. You cannot make any money on this kind of business. The business does not reflect the real cost of the reservation. You are better investing in another salesperson and getting real profit to the bottom line.”
  • “There will be an OTA study coming out soon that will be helpful to get people to make better decisions.”
  • “This is all about the revenue side. I feel good about where we are.”