4 reasons to not panic over the state of the lodging industry

While many are enjoying the fruits of this up market, there are those constantly in panic mode. It’s the type of trepidation that prevents them from fully enjoying the current state of the industry.

But, hey, I get it. The Great Recession hurt many owners and operators so bad the scars are still there. Plus, I see it happening with the way that we perceive the overall economy. Though we are experiencing one of the longest periods of economic growth in American history, many see the overall economy as fragile, where the slightest misstep will be ruinous and set us back to the dark days of 2008.

I am not an economist, but that assessment doesn’t seem right to me.

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Here in our corner of the world, evidence is we’re chugging along pretty nicely into next year. But we do have to be realistic. At some point the cycle will switch and we’ll recede from years of record profits.

And that’s OK. It’s true, it’s factual; and while everything may not be "satisfactual," as Uncle Remus wisely said it is, I think we need to sort out some of the real issues versus the ones we think may be real.

To make sure I had data backing up my hunches, I spoke with John Hach, senior industry analyst at TravelClick. Here’s what we came up with.

1. Terrorism

I have been out on the road saying the days of black swan events may be over. That the citizens of the world have become so inured to the reality of terrorism that it’s not directly affecting their travel decisions.

It seems terrorism and its nasty neighbor gun violence are being treated as random events that will mathematically have no impact on “my life.”

“The data are compelling about the resilience of travelers that want to get out and live their lives,” said Hach. “Terrorism is not a new occurrence in our lives, and it is about not letting terrorists win.”

2. Local Not Global

As the hotel industry continues growing globally, it’s impossible to draw conclusions about the state of the industry. It’s becoming too fragmented. I have been saying it for years on stage that when we look at overall industry numbers, it’s really just for fun and not relevant to the average hotelier’s everyday life. 

“What is different now is we have issues that have a localized, but significant impact on a market," Hach said.

This is true with issues such as infectious diseases. Zika has not yet been a threat, but may become an issue for Miami. It’s already caused some issues in Puerto Rico regarding how the island’s situation is being characterized in the press.

3. TSA Lines Ruining Your Business

It’s one of those issues people love to complain about, but in reality they go about their business flying around. We talk all about it with leaders from the TSA on my "No Vacancy" podcast. Listen HERE.

“People still went to the airport knowing they would have delays because they want to get out and travel. The data supports that,” says Hach.

4. The Negative Stuff

TravelClick has access to reservation data a year before the date of stay, and Hach said the pace of reservations is slowing down, but still looking good into 2017.

“Business on the books looks good. Reservations are ahead of where they were in 2015,” he said, however, “Growth is still there, but reservation pace in the last 90 days has me most concerned. We saw it start in June with a prolonged weakness in new reservation commitments. The current slowdown began in June 2016 and is continuing well into August. While overall year-over-year variances remain positive, there is notable deceleration within the group and weekday transient negotiated segments that carry the risk of lower revenue per available room (RevPAR) performance in the third quarter of 2016.”

The issue seems to be companies scaling back somewhat on their travel and entertainment expenses.

“We are seeing continued contraction in negotiated business. Right now they are showing signs of austerity. Outside of payroll, T&E is the largest controllable expense. Companies will justify a business trip but the pace of getting people out is not as high,” said Hach.

How do you see the market in your region? Seeing any trends, anything anecdotal you can share? Email me at [email protected] or on Twitter and Instagram @TravelingGlenn and let me know your opinions.

Glenn Haussman is editor-at-large for HOTEL MANAGEMENT. His views expressed are not necessarily those of HOTEL MANAGEMENT, its parent company Questex Media Group, and/or its subsidiaries.

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