As is always the case when I leave one of the big industry conferences, two things typically happen: First, I get a sense of the temperament of the crowd, especially about the current state of the industry; and second, my attitude about some fact I’ve taken for granted is either reinforced or called into question.

This year many of the people I spoke to commented on how the mood of the crowd was much more upbeat than had been the case five months ago at ALIS in San Diego. While the group certainly seemed different to me than half a year ago, I had a bit of a different take on what I was sensing and feeling. 

If I had to put it into one word, I’d use resignation.

Resigned to sluggish demand. Resigned to ramped price discounting. Resigned to reacting to conditions instead of being proactive. Resigned to negative prognostications about everything from performance to cash availability to the impending debt repayment crisis. And most of all, resigned to some sort of “new normal.”  

In short, a typically upbeat group of industry professionals has somehow been worn down enough that they have been transformed into the glass-half-empty crowd right before our eyes.

I guess in some ways this is why STR’s forecast for the remainder of the year is viewed with a bit of skepticism. Admittedly, our expectation of RevPAR declines in the 10 percent range for the entire industry, if wrong, is almost certainly so on the optimistic side. However, we still believe a series of events may yet transpire that could result in a significantly better second half of the year, especially in the fourth quarter:

1. First and foremost in our thinking is that demand will rebound beginning around mid-summer, especially among the leisure transient crowd. Recent consumer surveys indicate summer travel will be about the same as last year, especially in drive-to destinations. Stealing a line from Ypartnership’s Peter Yesawich, “Americans consider travel a birthright”—and we believe they will see to that birthright again this summer. 

If this transpires, then a certain stability will return to room rates, particularly at the mid-price and economy segments of the marketplace, where more than half of total room supply exists. If this were to occur, then a large portion of the industry will begin to approach flat RevPAR by the end of the year. But no matter the scenario, the Luxury and Upper Upscale segments of the industry will experience high double-digit RevPAR declines this year. 

2. Our second major assumption is that from a pricing perspective, the industry will return to historical patterns. Whenever demand growth is positive, the industry responds by increasing room rates almost immediately. During the past 20 years, this has happened 100 percent of the time. If nothing else, the last half of the year should show considerable improvement compared with the first half.

Having said all that, the other bit of information I took away from the conference is that my faith in what I’ve outlined above regarding pricing might need to be re-evaluated. While I still believe it will happen that way, I have never heard so many people say pricing power will not return to the industry for several years.

What I hope doesn’t happen is that this type of thinking becomes a self-fulfilling prophecy. With everyone, except STR, looking for industry RevPAR declines for between 15-20 percent, it would be a shame if the industry collectively managed to that number simply because that’s what everyone expects it to be. I, for one, do not believe that outcome is inevitable, and I will continue to say so as long as I believe it is not yet a foregone conclusion! 

On a completely unrelated note, I left NYC via car to drive to the Jersey shore on Wednesday afternoon. During my drive, two overriding thoughts kept planting themselves in the front of my brain. One was the fond memories, or at least those I can recall, of my summers at the Jersey shore with my buddies during college. Yep, plenty of good times were had by all! And the other was how impossible it would be to live in the New York, New Jersey, Pennsylvania area without EZ Pass.