Hunter Day Two: Hoteliers prepare for what might come
Hunter Day Two: Hoteliers prepare for what might come
24 MARCH 2017 8:21 AM

Speakers during the second day of the Hunter Hotel Investment Conference faced their fears about what the future might hold for the hotel industry. 

ATLANTA—There was a bit of March Madness going on during the second day of the Hunter Hotel Investment Conference.

It was a case of another day, another sports analogy.

On Day One, the industry’s up cycle was likened to a baseball doubleheader, or a game going into extra innings. Day Two’s analogy came from Robert Sarver, who in addition to being chairman and CEO of hotel franchise lender Western Alliance Bank, owns the NBA’s Phoenix Suns.

Speaking during the “A view from the top” president’s panel about the changing business landscape as it affects the hotel industry, Sarver said, “One day, your team can make the last-second shot and win the game by a point … and everybody thinks things are going good. … But then, the next week, the ball doesn’t go in, and you lose the game,” and that changes everything.

At this point in the hotel cycle, there’s the sense that the hotel industry is winning the game. But, as Sarver pointed out, that can change quickly.

“A successful company has to be open to change … willing to embrace change … and be willing to be aggressive at making change,” Sarver said.

Much of the conversation during Day Two of the conference focused on how the hotel industry will weather or embrace what comes next.

Photo of the day

David Kong, president and CEO of Best Western Hotels & Resorts, fist-bumps Liam Brown, president of franchising, owner services and MXM Select Brands, North America at Marriott International, over both having started their hospitality careers as dishwashers. (Photo: Bryan Wroten)

Quotes of the day
“We are in fact digesting an elephant, and we’re probably through the left ear or so at this point.”
—Liam Brown, president, franchising owner services and MXM select brands, North America, Marriott International, on a question from “A view from the top” moderator about the process Marriott is going through to integrate Starwood Hotels & Resorts Worldwide brands into its business.

“Marriott bought my alma mater. That was interesting to watch. It was like watching your baby get swallowed. It didn’t go off a cliff, it was eaten.”
—Barry Sternlicht, chairman and CEO of Starwood Capital Group

“We can talk about the macroeconomics all day long and learn a lot, but we’re in the part of the cycle where it’s much more important to understand the fundamental dynamics of the local market.”
—Mark Woodworth, senior managing director, CBRE Hotels Americas Research, on the “Statistically speaking” panel.

Tweet of the day

Slide of the day

Over the last nine years, the leisure and hospitality sector has been one of the fastest growing employment groups, according to U.S. Bureau of Labor Statistics data presented by CBRE Hotels Americas Research’s Mark Woodworth. (Slide: CBRE)

Data point of the day: 0% - 3%
Hunter Hotel Investment Conference attendees voted via an online poll Thursday morning and the majority said 2017 U.S. revenue-per-available-room growth would range from 0% to 3%. STR forecasts 2.5% RevPAR growth in 2017, and CBRE Hotels Americas Research forecasts 3% RevPAR growth this year.

Editors’ takeaways

On Thursday, speakers at the Hunter Hotel Investment Conference dove into the numbers and the fundamentals of hotel performance trends. Overall consensus says that the industry still has a good couple years of RevPAR growth ahead of it, notwithstanding any black swan events. But while RevPAR might still be growing, by how much? Several different speakers today alluded to the forecasts public hotel companies made on their 2016 Q4 earnings calls for 2017 RevPAR growth—most ranging anywhere from flat growth to 3% growth. Audience members agreed, and the majority voted in a real-time poll and said they expected their own company’s RevPAR growth to fall into that range this year as well.

While select-service properties continue to dominate the new-construction pipeline (according to Hotel News Now’s parent company STR, 64% of rooms in construction in the U.S. fall in the select-service upper midscale and upscale segments), more and more people I talked to this week are either building or renovating full-service properties. When I ask them why, given the bigger-picture trends pointing to select-service success, they all reminded me that despite macro-level trends, success is all about your street corner.

Yes, full-service can work when the market demands it, they reminded me. Yes, full-service built in conjunction with a convention-center overhaul is necessary. And companies that are doing this know they must have their ducks in a row when it comes to telling the story of their property and paying attention to full-service elements like standalone restaurants and banquet services that may have gone unnoticed in the past.
Stephanie Ricca, Editor in Chief

Reality is starting to sink in for hotel industry executives in terms of what the Trump administration can and cannot accomplish quickly or at all.

Financial markets that responded favorably to the election of a U.S. president perceived to be business-friendly are beginning to come to terms with the improbability that Trump can or will deliver on all of his promises, Hunter panelists said.

Robert Sarver, chairman and CEO of Western Alliance Bank, said during the president’s panel “A view from the top” that there’s still “a fair amount of uncertainty” about whether promises like tax reform and increased spending on infrastructure will actually be executed.

Starwood Capital Group Chairman and CEO Barry Sternlicht, honored at the conference with the 8th Annual Hunter Conference Award for Excellence and Inspiration, shared that concern, but said there’s at least one good thing about the Trump administration so far: “Business is no longer the bad guy.”
Robert McCune, Managing Editor

The general consensus is that the U.S. hotel industry is in the latter part of its cycle, a time in which one would expect owners and developers to slow down on new builds to save their money, hold back on accruing new debt and waiting out the downturn until it becomes profitable to take action. That isn’t necessarily the case.

Several owners and developers have spoken at this conference about how they expect to open new properties this year and they have new ones in various stages of planning. They might not be as gung-ho about building as they were a few years ago, but they’re still seeing opportunities to build. The word is that for new projects, just like acquisitions, it’s about finding the right combination of asset type, branding, sponsorship and market. While those are always important factors for development, it’s especially true now.

The other aspect I’m hearing is long-term holders should make sure they do it right the first time. Don’t go for a less-expensive option when designing the project, because it might cost more money down the road when it comes time for renovations years later. New builds are possible, but in this time of growing supply and a mature hotel cycle, it’s about doing it right, and doing it right the first time round.
Bryan Wroten, Senior Reporter

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