Lodging Conference: Throwing caution to the wind

The annual gathering at Arizona’s Biltmore hotel will be full of confident hotel executives.
The annual gathering at Arizona’s Biltmore hotel will be full of confident hotel executives.

The annual gathering at Arizona’s Biltmore hotel will be full of confident hotel executives.

Phoenix – In anticipation of this month’s 20th annual Lodging Conference here, a cross section of program speakers expressed a high degree of confidence as to the current state of the industry. Whereas 18 months ago industry leaders were still speaking of “cautious optimism,” today the caution has more or less been thrown to the wind.

“We’ve been optimistic for some time and it’s proven to be supported by all the data points we’ve seen, whether the metric is economic improvement, consumer confidence or the supply and demand equation,” said Wayne Goldberg, president & CEO of LQ Management, parent of La Quinta Inns & Suites, and a speaker on one of the conference’s “Power Players in Hospitality Real Estate” panels.

Goldberg has continued to see improvement in both the leisure and transient business segments, domestic as well as international.

Unlike earlier stages of the rebound, where demand growth was strongest on the two coasts, David Pepper, SVP of global development for Choice Hotels International, sees urban markets, like Chicago and Dallas, thriving now as well. “The recovery may have started with the gateway cities, which helped improve property valuations, before moving on to secondary and now tertiary markets,” said Pepper, who is featured on one of the conference’s “View from the Top” sessions.


For many brands, including Choice’s, the question isn’t “Is there an oversupply?” but, rather, “Is the supply properly distributed, given the demand?” “We continue to have excess demand in markets where we don’t have product to satisfy it,” Pepper said.

Considering the healthy state of the industry, compared to, say, 2009-2010, the conference agenda features additional content related to new development, private equity and real estate investment trusts. All are aspects of the business that are generating a lot of interest at this point in the cycle.

New development will be a focus of “Essentials to Meeting Lender Requirements” and “The Master Plan: Project Management,” among other sessions, while private equity gets its own specific think tank and real estate investment trusts are the subject of a “REIT Transaction Briefing.”

Over the years, Lodging Conference has also been the site of many brand launches, including Aloft and Element from Starwood Hotels & Resorts Worldwide. Whether this year will hold similar announcements remains to be seen.

Given the laidback atmosphere at the host hotel, the Arizona Biltmore, the conference lends itself to one-on-one networking opportunities that, in turn, help to foster deals. Signature events, like the Deal Corral and Express Networking, are designed with this in mind. The Deal Corral, for example, provides an opportunity to meet one-on-one with representatives from a range of industry-related companies, including finance, brokerage and management.

The annual “Above & Beyond Award” is being presented this year to Randy Smith, chairman and founder of Smith Travel Research. Attendees will also turn out to recognize Jerry Daly, chairman of Daly Gray Public Relations.


As at other industry gatherings through the year, a generational shift is taking place among conference attendees, no less the industry at large. Younger people coming into the business are very comfortable with technology, which raises the expectation across the board. Gen-Xers and millennials today expect information that was once only provided in print also to be available on their phone through a mobile app. Lodging Conference has an app as do competing events.

For as rosy as any lodging industry outlook may appear, there are always unexpected developments that could spell trouble. Asked if he saw any storm clouds on the horizon, Roger Bloss, president and CEO of Vantage Hospitality and a “View from the Top” panelist, cited two concerns, both industry specific.

Considering the number of entry-level workers employed, sharp increases in the hourly minimum wage could pose a problem, Bloss noted. “As an industry, we certainly believe in fair compensation. But the numbers being proposed by some municipalities today would be hard to support financially,” he said.

Similarly, the National Labor Relations Board determination this summer, holding McDonald’s Corp. a joint employer with its franchisees, raises serious concerns with long-term implications, if upheld by the courts, Bloss explained.

Asked the same “storm clouds on the horizon” question, Mark Woodworth, president of PKF Hospitality Research, who is presenting an “Industry Overview” at the conference, mentioned more macro, big picture concerns about the economy, including a possible stock market bubble.

➔ “We’ve been optimistic for some time and it’s proven to be supported by all the data points we’ve seen.”

Wayne Goldberg, president & CEO of LQ Management

Such a bubble conceivably could trigger a larger meltdown on the order of the economic crisis that occurred in the fall of 2008. “But it’s hard to build a rationale argument at this point that such a scenario will occur,” he said.

“Besides the economy, of course, would be a shock to the system on the order of another 9/11.” But to put such a possibility in perspective, Woodworth recalled the uncertainty around the SARS epidemic in 2003, “which thankfully never reached crisis proportions worldwide.”

Cycling back to more positive industry performance data, PKF-HR projected that U.S. occupancy would hit 65 percent in 2015.

Even more reassuring, Woodworth projected that lodging demand by  2015-end will have increased 25.8 percent since 2009, while supply of rooms will have grown by just 5.6 percent.