On the one hand, the hotel recovery has clearly gained traction since the dark days of the financial meltdown and the recession. Occupancy and rate are up pretty much across the board; leisure travel is strong; and even business travel and group bookings have shown improvement. Stock prices of some publically-traded hotel companies reflect the progress, and there is a general sense of hopeful optimism in the air.
On the other hand, talk of “double dip” persists—and anyone in the franchising arena can tell you that lending, new building, and willingness to take prudent risks are not yet where they need to be to sustain a long-term uptrend.
Most important, the clock is ticking on debt payments at all levels. Unless cash flow continues to improve and accelerate, many more properties stand in danger of default. A sharp, sudden rise in interest rates could choke off the progress even if cash flow does continue to improve; and it’s pretty clear that interest rates have nowhere to go but up.
So as we head into Lodging Conference next week, the question comes: Where are we in this recovery?
I have always been an optimist, and I am optimistic now more than ever. I suspect that boom days are ahead—though it is difficult to tell if the seeds for that boom have been firmly planted—or if the soil needs some more tilling before we see sustained growth.
I also suspect that the fourth quarter, the weeks ahead, will be determinative of what follows. If the industry can log another strong quarter of growth, I believe the momentum will be too strong to stop. If on the other hand, there is continued timidity among lenders, buyers, and if the consumer shows signs of weakness, all bets could be off.
What do you think? Is the industry headed for a sustained boom time, or are we destined to “bounce along the bottom”—or worse?
What are the key issues that industry leaders should address at this year’s Lodging Conference to make clear that the recovery is sustainable—and to reinforce the confidence that will make it self-perpetuating?
I look forward to hearing your thoughts—and to seeing you in Phoenix.