ALIS Day One: Waiting, watching, preparing
ALIS Day One: Waiting, watching, preparing
29 JANUARY 2019 9:18 AM

Editors recap the opening day of the 2019 Americas Lodging Investment Summit with takeaways, quotables and more highlights from the event.

LOS ANGELES—The 2019 Americas Lodging Investment Summit kicked off Monday with conversation about big-picture travel, economic trends and where the United States hotel industry fits into that scenario. Talk of the recent partial government shutdown, employment, labor and tourism challenges dominated the conversation, which will set the stage for the rest of the conference.

The overall mood among the industry is one of pragmatism: Hoteliers know what needs to be done to maximize their business and they’re doing it. The 3,000 ALIS attendees are talking deals and sharing their concerns and hopes as they continue to ride this nine-year cycle. Many are waiting to see how the economy shakes out during the first quarter of 2019 before making big moves, but everyone is laying the groundwork, as hoteliers acknowledged the industry is well into a recovery that will continue to change and adjust, though not necessarily for the worse.

Day one recap video

Photo of the day

ALIS Chair and co-founder of BHN Jim Burba (left) presented the ALIS Lifetime Achievement Award to Stewart Bainum Jr., chairman of Choice Hotels International (Photo: Bryan Wroten)

Quotes of the day
“If the inflation continues with construction (costs), then owning hard assets is going to be a good thing.”
—Bill Blackham, CEO of Condor Hospitality Trust, during the Lodging Industry Investment Council meeting during ALIS.

“There’s no shortage of capital out there. … I think there will continue to be a fair amount of capital in the market.”
Rick Rogovin, VP of the Hospitality Finance Group at Wells Fargo, during the Lodging Industry Investment Council meeting held during ALIS.

“The U.S.-China trade war, what is happening there? You have a situation where both the U.S. and China think that they’re winning this—that means we’re all losing.”
Brian Crawford, EVP of government affairs, American Hotel & Lodging Association, during the “Travel & Tourism—Today, Tomorrow, & Beyond” session at ALIS.

Tweet of the day

Data point of the day
2018 closed with a 6.6% growth in U.S. hotel rooms in construction, according to STR, parent company of HNN. Elizabeth Winkle, STR chief strategy officer, said “it’s not as bad as it looks,” attributing this growth in part to projects previously taken out of construction in 2017 following weather disasters and then re-entering the pipeline, and the addition of new hotel projects under construction in Las Vegas.

Editors’ takeaways

The general mood for hoteliers as 2019 unfolds can be summed up with three words: Let it ride!

Judging by Day One of the ALIS conference, a pragmatic thought process has replaced the exuberance of the past couple of years. Given the unpredictability and nastiness of what’s going on in Washington, hoteliers seem to be content to simply maintain the status quo when it comes to the industry’s performance.

Forecasts remain stable—there’s nothing flashy about revenue-per-available-room growth in the 2% neighborhood—but owners and operators are OK with that steadiness for the time being. The big worry continues to be extraordinarily fast-growing operating costs for hotels. The labor piece of the puzzle is one most hoteliers are struggling to get their arms around, and like it or not, hoteliers might be facing the reality of resetting their return-on-investment expectations to account for higher wages.

For all the talk about hoteliers not being able to raise average daily rate, the industry as a whole increased ADR 2.4% in 2018. STR, the parent company of Hotel News Now, expects ADR to grow 2.3% in 2019 and 2.2% in 2020. The long-term ADR average growth rate is 2.5%—so that comfort level displayed by conference attendees meeting in the conference hallways has some history to draw from.

That backdrop gives the industry a solid foundation as 2019 unfolds.

“As much as we were bouncing around the bottom in (2009) and (2010), we’re bouncing around the top right now,” said Brad Rahinsky, president & CEO of Hotel Equities, during the Lodging Industry Investment Council meeting at the Luxe City Center Hotel.

--Jeff Higley, Editorial director

The ALIS conference sets the table for the rest of the year when it comes to the climate of the U.S. hotel industry, and it’s clear everyone is talking about labor issues this year. Operators say there’s still room to streamline operations and cut costs, but those opportunities can be tougher and tougher to find, meaning that cutting into bone may happen sooner than anticipated. On the financing side, underwriters say they’re being more conservative in their underwriting because of labor worries. So while things remain steady, there’s a growing current of worry over what’s next beginning to bubble up. Travel and tourism is another big issue: The recent partial government shutdown seemed to underscore some bigger-picture concerns hoteliers have over both inbound and domestic tourism.

--Stephanie Ricca, Editor-in-chief

Attendees frequently spoke about the continuing uncertainty caused by the U.S. government, specifically the recent government shut down and the trade war with China. The government reopened days ago after a record-setting shutdown, and while that should be the source of some relief, hoteliers are already counting down the days until another shutdown could start after the temporary deal expires. They noted the shutdown hurt hotel performance in Washington, D.C., and near national parks, and hotel employees who had their hours cut won’t see any back pay and properties who lost out on business won’t make it up. The ongoing trade war with China continues to make it difficult for hoteliers to source materials without breaking the bank. While some have found alternatives for the time being, the added challenge of figuring out the logistics and quality issues from newer suppliers makes some of them wonder whether paying a higher price for Chinese goods would actually be worth it.

--Bryan Wroten, Senior reporter

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