1 HM: With everything you’ve seen in 2013, how will the hotel industry fare in 2014 in terms of overall operating metrics and profits?
GL: Overall, the U.S. economy will continue to grow at a respectable rate in 2014. The expanding economy will generate a 2.4-percent increase in room nights in 2014, and occupancy will rise 90 basis points to 63.1 percent. A 4.8-percent jump in ADR will drive a 7.3-percent increase in room revenue.
2 HM: Most pundits predict healthy growth for the industry over the next three years, but what out there could upset this optimism?
GL: We foresee healthy growth for the industry over the next three years. Several areas of the U.S. economy are strong, and economic growth appears sustainable. But any unanticipated external shock, such as an overseas military conflict, could potentially disrupt the economy. Also, it remains to be seen how the Federal Reserve will unwind its bond-buying program to avert a sharp rise in interest rates.
3 HM: They say all business is local. What is happening within your region that is affecting your business the most? What micro concerns do you have?
GL: We operate on a national platform, but recognize that each market is unique. We know the current cycle of limited hotel construction will not last indefinitely, and that adding hotel rooms in excess of what can be absorbed is a possibility in some areas. Oil and gas markets in particular appear vulnerable to overbuilding.
4 HM: Developing new markets is always top of mind. In 2014, and beyond, where are you concentrating on for growth and expansion?
GL: Our strategic growth plans for 2014 are both horizontal (i.e. geographic) and vertical (i.e. chainscale). Considering the favorable investment climate existing today, our team has expanded to better serve clients in key markets, as well as owners of more upscale select-service assets.
5 HM: As you lay your head down on December 31, what will your perfect industry dream be?
GL: In a perfect world, the current cycle of prosperity would endure. That means the U.S. economy grows at a 5-percent annual rate, households become wealthy and travel extensively, and no one ever builds another hotel in their market. In addition, a steady stream of debt and equity capital flows into the transaction market, and buyers’ and sellers’ price expectations remain perfectly aligned.