|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At last week’s America’s Lodging Investment Conference (ALIS), about 3,000 attendees were on hand to find deal opportunities. But the real story at the popular financial summit was the realization that the glory days of the last several years of record setting profits seems to be over.
Make no mistake, as a whole; the lodging business is still in good shape. But it appears a slowdown is afoot. While the depth and length of the slowdown is still up for interpretation, there was a palpable feeling amongst the attendees the hotel business is past its profit peak.
As recently as November the collective feeling expressed by top prognosticators was being recited in almost chant like fashion. Phrases like “Great Through ‘08” and “Doing Fine Until ‘09” were bandied about with almost reckless abandon.
Now there’s a clear change in attitude being spurred by the sputtering economy. But while the industry has yet to feel any negative impact from the changing economic environment, it seems as if everyone is girding themselves for tougher times.
“For the next few months the industry may continue to be fairly healthy,” said John Belden, President and CEO of Davidson Hotel Company, a hotel management company operating more than 30 properties. “If a flattening will happen, it will happen later on; perhaps in the second or third quarter. We’re up 10.5 percent in RevPAR and I don’t know if we’ll see [a downturn].”
Belden also noted the federal government is attempting to introduce economic stimuli to kick start the flagging economy. However, any stimuli will not be felt until 2009, he said.
Even if a downturn materializes later this year, John Russell, CEO of NYLO Hotels believes it won’t be as substantial as other more notable downturns. “A slowdown will in no way be as catastrophic as it was in 1991. No way. This is a blip. It is not a gloom and doom scenario at all. Basically, if you build something unique and service it properly people will come back,” said Russell.
At Kimpton Hotels, a boutique hotel company with 42 hotel open hotels and another 18 in development, Joe Long, EVP Acquisitions and Development said things are looking pretty good at his properties, which includes brands such as Palomar and Hotel Monaco.
“We see bookings and fundamentals remaining very strong. Right now people are in a bit of a panic, but we will weather the crisis,” said Long, noting that the transaction market, however, is becoming shaky. “The credit crisis is creating liquidity issues. We don’t how long it will last. But unlike 1991 we don’t have an over building phenomenon. It will be a slower year for transactions. However, people will still work on deals, but at a slower pace than the last few years. New developments will also take longer to put together.”
Davidson’s Belden agrees with that assessment, separately telling Hotel Interactive that, “Transactions are at a standstill until at least next summer. Buyers are waiting for a buyer’s market. They are waiting for the sellers to capitulate.”
At HEI Hotels & Resorts, Russell Urban, senior vice president development said the sky is not falling in the investment side of business. “We are seeing more of an adjustment than anything else. In fact, it’s a well timed adjustment. Lenders have to continue to put out capital in the marketplace. It’s what they do,” said Urban.
Finally, at Pyramid Advisors, a Boston based Management Company with 46 hotels and more than $7 billion in managed assets, SVP Business Development John Hamilton, said he’s not worried about any down turn affecting his side of the business. “There will always be opportunities for companies performing on all cylinders. You just have to identify opportunities for investors that we find attractive and know we can do business with,” said Hamilton.
|
 |
|
