Not since January 2009 has there been such a genuine, honest assessment of the hotel industry as there was this week in the halls of the JW Marriott at L.A. LIVE during the Americas Lodging Investment Summit. Of course, back then the assessment was one of dire circumstances and deer-in-the-headlights reaction. This time, the operative words are reserved optimism.

As the ALIS conference unfolded this week for the first time in downtown Los Angeles, it was abundantly clear that the wave of enthusiasm caused by strong operating metrics coupled with the frustration surrounding a tepid debt market caused most industry leaders to replace the unbridled exuberance of last year’s conference with a determined effort to manage expectations.

Don’t misinterpret that as a lack of confidence. There was a bounce in the steps of executives as they basked in the afterglow of an industry-wide 8.2% increase in revenue per available room during 2011. Many of them are forecasting similar gains in 2012 and playfully took to task what they perceive as skittish forecasts of several prognosticators—including HotelNewsNow.com’s parent company STR, which this week forecasted a 4.3% rise in RevPAR for 2012.

While the confidence on the banking side is harder to find, it is there. There is indeed debt available for those interested in acquiring or refinancing hotels—there just needs to be solid cash flow at the property and a fairly significant equity piece involved in the transaction.

An informal and completely unscientific survey among conference attendees revealed that they consider the spigot about a third of the way when it comes to these types of deals. It will flow much more freely when banks are able to shed unwanted and underperforming assets from their balance sheets. One hotelier put it this way: “The key is the flushing of all the distressed (stuff).” A number of attendees think that flushing could begin as early as late in the first quarter of this year. But be forewarned that it will be a messy, complex and lengthy process that might not be adequately resolved until late 2013 at the earliest.

Most attendees agreed that the near-stagnant supply pipeline is an attractive silver lining for the hotel industry (don’t count brand-development people and those developers champing at the bit to build hotels in that group, though!). My takeaway from ALIS is that there’s an acceptance from those involved that a robust construction cycle for the U.S. hotel industry will not appear until 2014.

The final piece of the investment puzzle is valuation. For the past few years, value has been in the form of debt rather than equity. That equation could start turning around as cash flow improves, and that could open the door to an active transactions market.

There are many mixed signals that hotel executives must decipher to get through what is clearly the most challenging time of the careers. The bad news is that until the global economy stabilizes, there are going to be more mixed signals appearing. The good news is that the executives have finally come to realize that being pragmatic about the situation is the only approach to take. No false cheerleading, but no hound-dog faces either. It appears as though they’ve taken a deep breath and a long look in the mirror to reach a sense of reality that creates an air of reserved optimism.

Now, on to some other observations from 2012 ALIS:

• It’s always a treat to listen to Marilyn Carlson Nelson, CEO of Carlson and the conference’s Lifetime Achievement Award recipient. Her acceptance speech was filled with humility and inspiration. The look in her eyes was one of clear passion for the hospitality industry, and she deserved the conference’s top honor.

• Keynote speaker Donald Trump could learn a few things from Nelson. Trump, as expected, gave a speech that could be summed up in one sentence: “I am the greatest thing in the history of mankind—and don’t you forget it!” He attracted the largest audience of all the general sessions but had the least to say. There were a couple of nice nuggets: he said office views of New York buildings are more valuable than the office views of Central Park. He also called Chicago a tough hotel market and branding is of the utmost importance. But all in all, he turned out to be a mediocre speaker with an uninspiring message.

• The venue itself was good. L.A. LIVE is a fantastic urban renewal project and a great example of out-of-the-box hotel development. The attempt by conference organizers to keep non-paying conference crashers out of the hotel’s conference space was successful. True, it wasn’t the most hospitable look to have curtains cutting off the perimeter of the lobby and security guards in full force, but it most certainly protected the investment made by those who ponied up the cash to register for the event. Although I missed the ambience of San Diego (where the conference was held the last couple of years), the venue was a suitable one for a conference the caliber of ALIS. Perhaps it will spur the development of much-needed overflow hotels by developers in attendance!

• The Tuesday general session with hotel CEOs was fantastic. Michael Shannon of KSL Capital Partners was in top form. He accurately questioned the impact that Room Key, the online metasearch reservation system launched this month by six hotel companies, will have. He said consumers won’t instantly realize they want to book rooms online to protect the investments of hotel owners—they are looking for the best deals. While the development of Room Key is important for the companies involved and will help hoteliers continue to refine their distribution-channel mix, it’s only one part of a successful strategy.

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