Who do you believe?

Who do you believe?

After a surprisingly strong summer for occupancy (not rate) in the United States, a slice of the industry is gathering this week in Phoenix feeling better about their plight and their future — right or wrong — at The Lodging Conference at the Arizona Biltmore.

The good news is that most think the worst of the Great Recession is behind us. Mark Woodworth of PKF says the results of the first half of 2010 have caused him to rethink his 2011 forecast, believing room rate and profit margins will accelerate in 2011 and 2012?which is what this industry needs so badly. Sure, occupancies are increasing, but with a few exceptions rate is not, which makes this business unprofitable for owners.

Even though a record 1.2 million room nights were sold in July and more than 1 billion will be sold in the United States in 2010, the industry lost US$10 billion in 2009 and still has a lot of making up to do. The commoditization of this business and continued desire by owners to give inventory to third-party intermediaries will continue to make this business a rough one for years to come. By hook or by crook, owners and operators need to drive rate. Based on demand, the time is now to start slowly pushing the needle in the other direction. Don?t push too hard, though, or you might meet troubling resistance from the consumer.

Furthermore, with little new development excepted through 2014, the consensus here is that the industry is also about to witness a maximum financial opportunity to buy. So all in all, the mood here in Phoenix is hopeful.

While the mood has been upbeat, 50-year industry veteran Mike Leven, president and COO of Las Vegas Sands Corp., was the contrarian at the opening session. When asked if he thinks the economy will take the dreaded double dip back into recession, he said, ?yes.?  What he sees on the horizon is no real indication that job creation will return and, as a result, there is no pricing power. So, he says, the industry will survive in a low-cost, low-rate environment with decent demand. He added that electronic distribution continues to control rates, and that is a real problem. I don?t disagree.