We have come through an extraordinarily difficult time, in our economy as a whole, and for our industry. The difficulties may not be fully over yet.
But regularly interacting as I do with dozens of hotel owners, general managers, lenders, and corporate managers, I cannot help but feel a strong sense of confidence for what is on the horizon—for the next 12 months, the next 24 months, and beyond.
My view is not rooted in wishful thinking, but in economics.
The fact is that the economy is gaining steam, even if slower than many of us would like. People are traveling, and spending money. And many hotel owners have figured out how to efficiently deliver the product and services consumers seek, while keeping costs manageable, and leveraged debt under control.
Within the industry, hotel supply continues to be at historic lows, relative to demand. That means that for new hotels, replacement costs will soon reach the same level as acquisition costs. When this happens, the natural force of the economic cycle will spur a boom in construction and development—with an eventual rise in asset prices as well.
The message is clear: Now is the time to develop and build. Now is the time to pour foundations, whose results will be hotels that will sell at great prices, and reap tremendous rewards for developers, down the road.
I am not a fortuneteller or prognosticator, so I cannot predict exactly when the stars will align in perfect formation—but align, they will.
And when they do, those who today are developing good products, under strong brand names and operating systems, will make a lot of money.
You can bet on it.