Why hotels believe they will survive a downturn

Something curious is afoot. A new wrinkle, a fascination I just can’t stop thinking about. And it all plays into human psychology and how we interpret the world.

It’s the notion of me vs. them that’s seemingly programmed into our DNA from pre-historic tribal days. No, I’m not talking about the ladies from The Bachelor, but an interesting observation I saw played out repeatedly during ALIS.

If you recall, in my previous column I urged everyone to stay sharp so as to not let the eventual downturn become as deep and dour as the last one. And the more I think about it, the more I realize everyone I spoke with during ALIS had amazing confidence for 2016 regarding their companies.

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Every. Single. One.

Then why did many people also say they were feeling like the industry was peaking, and while a downturn is most definitely on, or just past the horizon, it’ll be a soft landing and not End Times? Unless of course you are Michele Bachmann, then you most definitely think we’re poised for The End.

Human psychology. We’re all constructed with the belief that we’ll personally be OK, while others may not enjoy the same positive outcome. It’s a necessary evolutionary tactic that has done our species well. But in 21st century society, success boils down to a combination of professional smarts that tap into built-in positive instinct to keep the downturn doldrums at bay.  

But again, we need to ensure as whole that confidence doesn’t become hubris. I think that’s the most critical takeaway from the event.

Now, a little bit separate but somewhat connected; while at ALIS I ran into some good folks brimming with the former, and most definitely not the latter. They shared their thoughts after the event with me, and by all indications there is still an amazing bounty to be had.

According to Charles Oswald, president & COO, HP Hotels, their portfolio is continuing to realize steady occupancy growth in spite of new supply impact.  But he thinks it's rate that’s going to make 2016 a magical year.

“We went into this year’s RFP process with the understanding this might be our last opportunity to make big moves with negotiated rates before facing the growing challenge of new supply and price sensitivity. Our mature, stabilized properties are continuing to capitalize on smart revenue management strategies and significant negotiated rate increases within our corporate transient and group segments to trend toward a 6.5 percent ADR lift in 2016," Oswald said. He added some clients accepted up to $20 rate increases for 2016!

Oswald is convinced the US hotel market will continue to see 5 percent RevPAR gains and improving cash flows through the balance of 2016, and he thinks there is a chance modest negotiated rate gains for 2017. Pretty powerful.

Meanwhile, over at Hospitality Ventures Management Group, SVP and COO Richard Jones also thinks his company will see healthy growth “in the vast majority of markets.” The ones he sees trouble in are all oil and gas related ones.

“We are pretty pleased with where we are and there is a good pace of performance. By every measure we are up and we have been able to get steady market share growth,” Jones said. “We’re also positive on fundamentals, but it may be not as good everyone said it will be. However, from a net travel perspective 2016 should be good for us as there are lots of people flying and driving, plus there are opportunities for new development out there we are [leveraging].”

How do you see 2016 shaping up? Do you think your company has the goods where others will fall short? What’s your strategy?  Let me know at [email protected] or on Twitter @TravelingGlenn.

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