At some point while I’m interviewing a subject, I often ask their thoughts on how they see hotels performing on a go-forward basis. Lately, the answers to that question have started out positively, with sources pointing to increasing demand, decreasing supply and an overall uptick in operating metrics such as revenue per available room.
That tone, however, changes when the source nears the end of his or her answer. After listing the many reasons hoteliers have to be optimistic, inevitably the source quickly adds a qualifying statement that goes something like this: “But there are a lot of black swan events out there that could disrupt everything.”
Such “black swan events” include the eurozone crisis, the U.S. fiscal cliff decision and the upcoming U.S. election. Undoubtedly, all are clouding the horizon for the hotel industry and have made producing forward-looking guidance a difficult task.
I understand there are risks out there. Any of the events listed above (as well as a half dozen others not listed) could drag down U.S. gross-domestic-product growth. And with the hotel industry being so closely tied to GDP, any macroeconomic upheaval could easily derail the recovery the sector has been enjoying.
That said, how is worrying about any of this any different from where the industry was 25 years ago? Risk is always going to be a part of the game in not only the hotel industry, but also any industry for that matter. There’s always going to be some danger that political turmoil or an unexpected economic downturn is going to happen. We’re never going to live in a world without risk.
To me, the ultimate example of this has to be listing the upcoming U.S. election as one reason to be cautious about the future. The election! You already know who the two contenders are. You know their plans for the future. You can’t exactly say, regardless of who wins, that you’ll be blindsided over this. Just like any other variable out there, you need to plan accordingly and keep on with business as usual instead of wringing your hands about it.
I firmly believe hoteliers need to focus more on the beginning part of their answer when I ask them their thoughts on operating performance going forward. I’m not saying the macroeconomic environment should not be brought into forecasts; I’m saying don’t forget about the here and now: supply is near zero, demand is still setting records, RevPAR is up.
Don’t talk yourself into another downturn. If you focus on what you can control, everything else will take care of itself.