Editors recap Day Two of the 2019 Americas Lodging Investment Summit with takeaways, quotables and more highlights from the event.
LOS ANGELES—U.S. hoteliers are focusing this year on what makes business work for them, according to speakers at Day Two of the Americas Lodging Investment Summit. As the industry continues to chug along, hotel owners and operators are zeroing in on profit opportunities they can control, knowing that external factors—such as rising labor and construction costs, and economic and political waves—always present some challenges, albeit ones they can’t control.
“From a standpoint of the opportunities in 2019, be disciplined,” advised Michael George, president and CEO of Crescent Hotels & Resorts. “Stick to your knitting, stay within your particular swim lane, do what you’re good at and just continue to follow that. Perseverance will pay off.”
Brand, owner and management company executives spent a lot of time Tuesday dissecting early indicators of the next downturn, and the overall consensus is that the U.S. hotel industry is simply in a different place now than it was prior to past downturns.
“We have to focus on the early indicators to allow us some room to make adjustments,” said Best Western Hotels & Resorts President & CEO David Kong. “Every downturn is preceded by supply growing more than demand, and now we have a good situation, but we have to pay attention to that. There are fewer projects being done because costs are escalating, so supply is much more controlled and banks are more prudent.”
Day Two recap video
Photo of the day
Quotes of the day
“If you look at what tends to bring cycles to a nasty end, it’s supply. Now the level of supply going in is much lower than in the previous two cycles.”
—Mark Wynne Smith, global CEO - Hotels, JLL, during the “The Numbers-What to Expect in 2019 & Beyond” general session panel.
“We have 9 million jobs to fill in this industry, and 900,000 are unfilled. We have 10% unemployment in our industry, and that’s a big issue for us—an issue we need to solve.”
—Geoff Ballotti, president & CEO, Wyndham Hotels & Resorts, during the “Boardroom Broadcast: Investing Today, Tomorrow & Beyond” general session panel.
Tweet of the day
Slide of the day
STR SVP Vail Ross shared the company’s latest forecast at ALIS on Tuesday. Prepared with Tourism Economics, the company forecasts revenue per available room will grow 2.3% in 2019, driven by 2.3% average daily rate gains and flat occupancy. The company forecasts supply and demand both will grow by 1.9% this year.
Last night at an ALIS reception, I found myself in a conversation about comparing the U.S. hotel industry to cars. It was a lot of fun—and telling—to hear how the people around the bar matched up hotel industry performance and activity to the right vehicle. A couple people chose a Tesla, and some of their reasons why seemed fitting: It looks good and pretty innovative from the customer-facing standpoint, they said, but nobody really knows how long the battery lasts, and most importantly, they aren’t sure what will happen when battery conks out—will it go up in flames? Just coast along for a while before it dies?
My takeaway here is that the mood around the busy halls of the JW Marriott is that hoteliers, investors and franchise companies are making hay while the sun shines. Most people are in agreement that barring any unforeseen black swan events, the next downturn won’t necessarily look like the last two, thanks to a much more in-check supply and demand scenario. In fact, the words “downturn” and “recession” have barely been used. CBRE Hotels’ Mark Woodworth characterized the next cycle movement for the industry as a “blip” (to use a technical term).
As usual, time will tell.
--Stephanie Ricca, Editor-in-chief
It might be late in the cycle, there could be another government shutdown looming over us, and interest rates are set to increase over the next several years along with a bunch of other challenging obstacles of various sizes. But business continues, and that means hoteliers are making deals.
Hoteliers I spoke to at the conference and those on panels talked about deals they have in the works and plans they have for this year and the next couple. Everyone is at least considering growth because they see some path to success through all the uncertainty, increasing costs and volatility.
Those who are making deals and expanding are doing so more carefully perhaps than earlier in the cycle, but they’re still making them. While they acknowledge the challenges ahead of them, they’ve said the fundamentals of the industry are still strong and taking strategic steps forward will keep the industry moving along.
--Bryan Wroten, Senior reporter