I don’t believe in omens. But if I did, then the plane flight from Cleveland to Los Angeles last Sunday evening would have suggested an onslaught of terrifying news coming out of this year’s Americas Lodging Investment Summit.
My fellow passengers and I were sitting pretty, cruising on a relatively smooth ride above the Rockies—until the pilot came on the intercom.
“Grab your seats, folks,” he said with the cool nonchalance that only an experienced pilot could muster. “We’ve got a few bumps ahead of us.”
Talk about an understatement.
The next six minutes brought the worst turbulence I’ve ever encountered in my life. Imagine a 747 pitching at a 45-degree angle from one side to the next, dropping hundreds of feet in mere seconds, only to nose up again before taking another plummet. The violent jerks and drops were met with a few screams onboard. I would have done the same had my teeth not been clenched as I grabbed the seatback in front of me, knuckles white, palms sweating.
When the pilots finally righted the aircraft, I had to assure the guy sitting next to me that while, yes, my pants were soaking wet, it wasn’t a result of my bladder jettisoning its contents; the full cup of water on my tray had simply fallen into my lap. I’m not sure he believed me.
Fortunately, things went much smoother on the ground in L.A.
It was my first time in the city, the majority of which I experienced through the windows of my taxi during my ride to the JW Marriott at L.A. LIVE. The development was impressive, conveniently located next to the Staples Center and the Nokia Theatre, which hosted the conference’s general sessions and major keynotes.
Did I miss the easy, breezy ambience of San Diego from years past? Hell yes. But L.A. LIVE wasn’t a bad substitute.
The conference itself lacked any stop-the-presses type announcements, but that’s not to say the three-day event lacked news value. I encourage you to peruse our site for the most in-depth coverage in the industry. For now, here’s a Cliff’s Notes version of my top six takeaways from the first major investment conference of the year.
1. Panel attendance was down—and that’s a very good thing
I know some speakers and panelists were disappointed in the number of delegates attending their respective sessions, especially given the 2,400 hoteliers in attendance, but they shouldn’t be. While in years past some of these events were packed, that’s only because attendees had nothing else better to do. There were no deals to be made, so hallways remained empty as investors sat twiddling their thumbs waiting for that much-sought-after inflection point from the bottom.
It was a different dynamic this time around. The hallways outside of meeting rooms were more crowded than a New York subway stop at rush hour. People were getting things done, and that’s a very healthy sign for the hotel industry.
2. Yes, deals were getting done, but not without incurring brain damage
One of the most interesting sessions came Monday afternoon, when five executives from five different companies explained how they each achieved a recently announced deal. The common thread? Deals are damn difficult.
The term “brain surgery” was used more than 20 times during the 75-minute session to convey the difficulty of finding alternative funding sources and tax credits and government incentives and willing lenders and equity partners and good locations and … you get the point.
3. If I hear “cautious optimism” one more time …
The phrase was thrown around more times than I could count. Even typing it is making my head hurt. But it’s accurate. Whereas last year ALIS hosted a three-day, drink-the-Kool-Aid love fest, spurned hoteliers came to this summit with their feet firmly planted on the ground. Yes, fundamentals are up, but there’s still a dearth of debt financing.
4. Room Key not a hit with everyone
The “my favorite panelist” award goes to the plucky Michael Shannon of KSL Capital Partners. While sitting under the bright lights of the Nokia Theatre stage, surrounded by hotel industry tycoons on both sides, he had the guts to swim against the status quo and openly question Room Key. “I don’t think it will work,” he said point blank.
Do I agree with him? Not entirely—but he did raise a lot of good questions. Among them:
• Why would consumers want to support a site just because it benefits owners? Guests simply want to shop with the easiest tools to find the best prices for the best product.
• Does the hotel industry really expect to compete with the giant online travel agencies? The big brands might be rowing in unison finally, but they’re racing against high-powered speed boats, he said.
• Was any consumer looking for yet ANOTHER online shopping tool? There’s already too many out there through which to sort, he said.
(On a related note, my least favorite panelist was The Donald. Had I wanted to hear about “The Apprentice,” I would have picked up a TV Guide at the airport.)
5. Banks stepped up big
One of the biggest fears at the onset of the recession was that banks would let distressed assets fall into disrepair as they sat languishing on lenders’ balance sheets. In reality, many banks were more proactive than owners, injecting the necessary capital to keep products in top shape in order to maintain asset values.
Anthony Dimond, principal with Horwath HTL, summed it up nicely: “Banks get it. They know the brand absolutely has to be there.”
6. The hotel industry has a new “frenemy”
If I’ve gleaned anything from all of my wife’s primetime soaps—other than the fact that teenagers all drive nice cars, rich families hide too many skeletons or that true love comes and goes with each passing commercial break—it’s that every circle of acquaintances comprises at least a handful of “frenemies.” Or, in the common tongue, those people who are close enough to be at once a best friend and a bitter enemy.
That seems to be how much of the hotel industry views President Obama. For every complaint about fiscal policy and business reform, there’d be counterbalancing praise for his recently announced travel initiative.
Stat of the week
2,400: Approximate number of attendees at ALIS this year, a number that’s back to the attendance seen during the frothy days of 2006 and 2007.
Stat of the week II
2.2: The percentage point difference between STR and PwC’s respective RevPAR forecasts for 2012. STR is projecting an increase of 4.3%, while PwC forecast growth of 6.5%.
Quote of the week I
“I don’t think it will work.”
Michael Shannon of KSL Capital Partners commenting on Room Key in “ALIS: Leaders debate success of Room Key.”
Like I said above, the guy’s got guts. Nice to hear someone speak against the status quo, regardless of whether you agree or disagree.
Quote of the week II
“You can price a loan in CMBS on Monday and then the next morning Europe hiccups and all of a sudden your deal is not priced right anymore.”
Tino Korologos, a director in the real-estate consulting practice at Deloitte, in “Demand remains for hotel CMBS.”
Comment of the week
“He was quite uninspiring to listen to.”
“Anonymous” commenting on Donald Trump’s keynote at ALIS.
That’s a polite way of putting it, Anonymous.
Email Patrick Mayock or find him on Twitter.
The opinions expressed in this blog do not necessarily reflect the opinions of HotelNewsNow.com or its parent company, Smith Travel Research and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.