LOS ANGELES, CA— Do not expect marked improvement in hotel performance or a significant upsurge in transaction activity soon, despite low interest and leverage levels, comparatively little new supply and a veritable glut of money just itching to be invested. That was the general message to attendees at this year’s edition of the Americas Lodging Investment Summit (ALIS), held here last month. Over the course of the three-day event, industry executives and analysts claimed the near-term outlook was effectively clouded by such present-day concerns as the struggling economy, imminent prospects of a war with Iraq, further terrorist activity, and a host of industry-specific issues such as Internet-driven profitability leakage and the specter of an upturn in new supply. Offering up insight on one of the potential problems— as a participant on a panel charged with “Measuring The Pulse Of The Industry”— was Smith Travel Research CEO Randy Smith. As he pointed out, this past summer showed the first vestiges of an increase in new-supply numbers. On the other hand, Smith said that, starting this past November, demand on a 12-month moving basis began to show a positive spin, and a more definite rebound could be seen over the course of the past four months. “More rooms were sold this past December than in any other December in the industry’s history,” he said. Continuing in line with this 12-month moving basis, Smith said industrywide occupancy was down about 1%, while rates finally showed signs of recovery after posting a downturn for 14 consecutive months. Beating Smith to the podium was Donald Ratajczak, consulting economist and Regents professor emeritus of Georgia State University, who said the second half of the year should show “gradual improvement,” largely as a result of the various economic stimulants being brought to the fore. On a more hotel-specific bent, he said hotel investors stand to benefit from “great interest rates, provided they can prove themselves to be satisfactorily creditworthy.” Also on this opening panel was Deloitte & Touche Partner/Travel, Tourism & Leisure Marvin Rust, who said worldwide RevPAR performance was declining prior to the events of 9/11. As to whether the worst is over, he said there seems to be “increasing signs of [a quickening of]transaction activity.” Moderate signs of optimism also reigned during a later “Transaction Outlook” forum as Starwood Hotels & Resorts Senior VP/Acquisitions & Development Joe Long, Interstate Hotels & Resorts Senior VP/Development Larry Shupnick, Host Marriott Corp. Executive VP/Acquisitions & Development James Risoleo, Insignia/ESG Hotel Partners Senior Managing Director Tom McConnell and Eastdil Realty Co. LLC Managing Director Steve McKenzie ventured prognostications based at least as much on market potential as on deal-making reality. Similar sentiments marked day two of the industry conference when a panel of top hotel and travel organizations delivered their “Travel Industry Outlook.” The consensus among Hilton Hotels Corp. President/CEO Stephen Bollenbach, Marriott International Chairman/CEO J.W. “Bill” Marriott Jr., Cendant Corp. Chairman/President/CEO Henry Silverman, American Express Co. Group President David House and Continental Airlines President Larry Kellner was mostly cautious— but nonetheless hopeful—for the short term, while things were said to look better farther out. Identified as impediments to any quick improvement/turnaround for the industry were the likelihood of a war with Iraq, further terrorism incidents, a still-struggling economy, and profitability-damaging inroads by third-party Internet marketers. On the other hand, a sense of calm was delivered when Marriott said he has lived and worked through some half-dozen recessions and downturns, thereby suggesting the industry’s cyclical nature can eventually help rectify the currently challenging situation. Meanwhile, “Public/Private Development” initiatives were examined by Hyatt H
