Being deluged with data for nearly 29 hours has its advantages. Sure, the 275 attendees of the second Hotel Data Conference felt a little punch drunk by the end of the even late yesterday afternoon.
But for as drained as one can feel after being exposed to so many numbers in such a compact time period, there’s a certain sense of adrenalin, too. The event, presented by Gaylord Hotels and hosted by STR and HotelNewsNow.com, provided a true picture of the state of lodging industry.
The underlying thread of the data was clear: Hotel operators everywhere are leaving money on the table as they are reluctant to raise rates. The good news is that Christine DeZarn of Rubicon presented data that suggests average daily rates are beginning to turn positive when looking at future bookings. The not-so-good news is that there’s a long way to go before the industry makes up the ground it lost during the past 24 months. Mark Lomanno of STR told attendees that it could be six years before inflation-adjusted ADR reaches 2007 levels. Ouch.
More good news: the rate of supply growth has slowed. More not-so-good news: there are still more than 60,000 hotel rooms in construction. Absorbing additional supply is the last thing the hotel industry can do when it is struggling to fill the rooms it already has open.
The fact that demand for hotel rooms is on the rise is another thing to be happy about. But again, there’s caution. The lack of demand in group business causes concern. The season for negotiating corporate rates is just about here, and the results of those negotiations are going to go a long way in determining how quickly the recovery advances—or if there’s a recovery at all. There was a lot of talk about hotels wanting to stand firm on rate and maybe even reel in some of the freebies it had awarded clients during the past couple of rounds of negotiations. We’ll have to see if that holds true.
But out of all the data and comments made during the conference, one made during the closing session by PricewaterhouseCoopers’ Scott Berman stuck with me. Berman contends that one of the big dangers for the hotel industry is the effect of all of the deferred maintenance and capital expenditures that has occurred during the past two to three years. Because it’s been seven or eight years since many hotels were last renovated (following the last downturn), physical obsolescence is a big concern of Berman’s. I can’t disagree with him. As a frequent traveler, I am seeing a lot of wear and tear on hotels—some that makes a guest say “Eeeewww!” It’s difficult for owners to pump money into hotels because cash flow has been so restricted. But they’re going to have to face that music sooner than later. Stuart Greif of JD Power & Associates told attendees that customer satisfaction for hotels is high, but that is in danger of being damaged if attention is not paid soon to the physical conditions of hotels.
All in all, the picture painted at the Hotel Data Conference was slightly optimistic. There are still some big hurdles for the industry to clear, but all in all, there’s reason to be somewhat happy that data behind the hotel industry is better than it was a year ago.
