Hunter Conference: Industry choppy, but no doom-and-gloom scenario

Hunter

ATLANTA – The hotel industry has battled back long and hard since it hit its nadir in 2008. Seven years later, a 2015 that touched record levels in regard to key performance indicators, including demand. Now through the first quarter of 2016, it is clear: the industry was able to grind out about all it could, made its way back to optimal levels, but with not much room for further increases, a recede in growth is upon it.

This scenario, however, isn’t necessarily cause for concern. That was the overriding sentiment during the Hunter Hotel Conference, here at the Marriott Marquis.

Mark Woodworth, senior managing director of CBRE, put it bluntly: “We are at the peak.” The declaration elicited no audible gasps from the audience, a sign that, despite what Wall Street is proclaiming, most still feel like the hospitality space still has some smooth road ahead.

Above all, while the industry is at apex level, this is not a doom-and-gloom scenario. Not by far. “This is not 2008,” said Jan Freitag, SVP of lodging insights at STR. “We are going to be fine; we are ok.”

In fact, if not for Wall Street’s skittishness and unfounded apprehension (its tendency is to base an entire industry on the fortunes of top MSAs, like New York, where supply increases and RevPAR dips are a reality, unlike some secondary, even tertiary markets, where KPIs continue to thrive unabated), the scenario painted at the conference would have been slightly rosier. The evidence: 2016, barring an event, should reach 5-percent RevPAR growth. “We think that’s okay growth,” Freitag said. “But Wall Street is running for the exits. There’s a disconnect.”

There’s was also a divide between rate and occupancy in 2015; namely, that record demand and occupancy did not equate into record ADR growth (ADR growth was only 4 percent last year). “That should have brought pricing power,” Freitag said, alluding to the fact that full-service hotels were selling seven out of 10 rooms last year. “That was disappointing.”

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PRESIDENTIAL TALK
A panel of hotel presidents and CEOs echoed many of the same sentiments as the forecasters set before. Here are some compelling quotes.

On the industry’s prospects…
“Coming off five years of growth—we all look smart. But we are now talking ourselves into a recession. There’s lots of negativity, yet fundamentals are still good. – Dave Johnson, president & CEO, Aimbridge Hospitality

“We are still good through 2018. Supply and demand never been as good this late in the cycle. At some point, things will slow to 2- to 3-percent growth. Get projects done and open into 2018.” – Steve Joyce, CEO, Choice Hotels International

“We are now in the part of the cycle where you notice it’s a street-corner business. We are starting to see choppiness. Some markets are good; some, where did they go? There is a sea of change. If you don’t differentiate today, you won’t win.” – Mark Laport, CEO, Concord Hospitality

“Working with owners is the cornerstone of our business. Focus on properties and make key investments for when things might slow down.” – Elie Maalouf, CEO of The Americas, IHG

Pres

“Invest in products and customers to build loyalty. You want a broader loyalty base when the downturn comes.” – David Kong, CEO, Best Western International

“Those that will thrive aren’t the smartest, but willing to adapt to change. Rate is critical this year. Yield higher rates or making a mistake.” – Steve Joyce, CEO, Choice Hotels International

On distribution…
“If we stopped giving OTAs inventory, they’d be out of business tomorrow.” – David Kong, CEO, Best Western International

After Expedia CEO Dara Khosrowshahi criticized Hilton and Marriott programs to push for more direct bookings…
“It’s amusing that a supplier is warning the client. Not a good sign.” – Steve Joyce, CEO, Choice Hotels International

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