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Forget the Phantom Menace Industry leaders are agreeing with our assessment the halcyon days are back. But are you taking advantage of it? Monday, October 08, 2012 Glenn Haussman

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Top industry leaders are coming around to our way of thinking about the actual state of the hospitality business. And it’s a good thing too. Pervading negativity isn’t doing anyone any good. As we wrote last week, there is a Phantom Menace affecting the mental health of the industry and for everyone to maximize profits they need to shake it off. Right now would be nice, thank you very much.

At the Lodging Conference last week, the tenor of the conversation was in an odd place where things weren’t good or bad, they just were. And no matter. The evidence shows the industry is in fine shape many folks are not yet ready to commit to a positive state of mind. Those that do not turn their attitude around risk turning that bearish attitude into indecision, which will ultimately yield those individuals and companies less opportunity in the coming months and years.

We’ve been saying it for a year now; those that are bold, brash and brave are the ones that people in 10 years will look back at with awe. Now is time for opportunity, not sitting on the sidelines.

One of the most prevalent attitudes expressed last week was “We are OK, but there are people out there still suffering in specific areas.” Interestingly, of the hundreds of people I spoke with not one of them actually lived or worked in those pockets of hospitality sadness. Instead these executives just insisted that’s the case anecdotally. I have to assume they are there, but either way it is irrelevant. As an industry it’s OK to express concern for that corner, but allowing it to affect decision making at this time in hospitality history is not the way big companies should be doing business.

I am taking the side of Steve Joyce, CEO of Choice Hotels on the current and future state of the hospitality business. “We are going to have a six to seven year run that is all positive regardless of what the economy does. Any help from the economy we’ll have a really good run,” he said, adding that financing is coming back for deals and he is seeing new construction return.

So for the next couple of years we could be in an amazing sweet spot if Joyce’s thoughts become reality. It will be a time when both the development side of the business is busy doing deals and the operations side of the business should yield tidy profits. That is, if they continue to raise rates. If the airlines are doing it, so can you!

“It is time to push prices,” said Joyce. Hallelujah!

“This has been an incredible year for us,” said Roger Bloss, CEO of Vantage Hospitality, which runs brands such as Americas Best Value Inn and the Lexington Collection.

Other top industry executives agree, although not at strongly.

Nancy Johnson, Executive Vice President, Development, Carlson Rezidor Hotel Group: “We are as profitable as we have ever been in this industry. But the hardest thing we have to do as leaders and brand managers and owners is maximize our profits. We have to get aggressive on rate strategy. Carlson Rezidor has a real focus on revenue optimization and makes it as easy as possible for hotels to look forward and increase rates,” she said.

Liam Brown, Chief Officer, Owner & Franchise Services, COO, Select Service & Extended Stay Lodging, The Americas, with Marriott International, said the industry is not aggressive enough when it comes to raising rates. And it’s limiting current upside potential. “We are remarkably good at looking back and saying last April we should have raised rates. Airlines are up 14 percent year over year so our challenge is to be confident from a pricing perspective. We have ambivalence about headline driven perceived volatility that keeps people from making confident decisions on pricing.

We are selling as many rooms and more than at the peak, we just need confidence of pricing and ability to get rate increases from customers. They will pay they are already paying on airlines,” said Brown.

And the transaction side too, should start cooking said David Roedel, partner in Roedell Companies. They construct, renovate and operate hotels mostly in the northeast United States.

“I am seeing a lot more positivity. The people I meet in regards to deals say next year will be a very good year for transactions. There should be more seller motivation as brands continue to push PIP requirements. Then they will have to either deal with the CAPEX or sell,” said Roedel.