NEW YORK— More than 50 members of the Big Apple Chapter of the Hospitality Sales and Marketing Association International got a glimpse into the future when several key industry consultants gave a snapshot of hospitality trends for 2001 during a recent meeting here. Looking ahead were speakers Thomas Fisher, senior vp, Jones Lang LaSalle Hotels; Sean Hennessey, director, hospitality and leisure consulting, PricewaterhouseCoopers; Lynda Schrier Wirth, president, Schrier Wirth Executive Search; Michael Whiteman, president, Joseph Baum & Michael Whiteman Co. HVS International Executive VP Anne Lloyd-Jones, moderated the panel. Based on a recent proprietary global hotel investors sentiment survey, Fisher anticipated that the U.S. hotel market is going to be the most active market in coming months in terms of transactions. “Although the frenetic activity of the mergers and acquisitions phase of 1996 to 1998 has subsided, we continue to be bullish, and see keen interest in hotel acquisitions, not only domestically, but abroad.” He noted year-to-date figures in the United States; Jones Lang LaSalle closed seven hotel transactions estimated at $200 million, and recently took bids on six properties or portfolios with a market value of $670 million. Fisher acknowledged during the past two years capital has shifted significantly from public to private markets with “the investment universe becoming very blurred today. There are owner/operators, management companies, opportunity funds… there are also a number of private investment groups that are very bottom-line driven,” all of which are expected to continue to be very active in the market. He noted brands also are “very active,” concentrating on distribution. Institutional investors are expected to be “somewhat active,” he added, with “limited activity” stemming from real estate investment trusts. Overall, said Fisher, buyers are looking for value-added opportunities, with a continued focus on 24-hour urban markets and resort destinations. According to PwC’s Hennessey, the uniqueness of the New York City market creates a challenge in contrasting it against a national backdrop. For example, year-end 2000 estimated national average occupancy is expected to be 63.9%; New York City expects occupancy of 85.3%. The same with average room rates. Nationally, ADR for year-end 2000 is expected at $85.06; in NYC, ADR is expected at $213. “Demand continues to be strong,” said Hennessey, who noted with the exception of January, the market has been above the 20-year high throughout 2000 in terms of occupancy. “If anything, the spread between where New York City sits and the balance of the country is going to continue to get wider next year. We anticipate nationally the occupancy level in the U.S. will drop about 300 basis points to 63.6% next year; we expect the occupancy level in New York City to be about 84.8%.” The drop of some 50 basis points below expected 2000 occupancy closeout is due to smaller hotels opening in the market, noted Hennessey. Nationally, on the operating side, Hennessey said PwC sees a decline in the growth level of profitability of hotels, although hotel profits have continued to improve. “It’s starting to approach zero,” he noted, adding “that’s really the key reason underlying Wall Street’s lack of interest in the hotel industry over the past year-and-a half. It’s looking for both a growth story and an income story, and when you can’t tell that growth story anymore, it makes it much harder to keep [Wall Street’s] interest compared to other fast-growing industries.” Hennessey also saw the midscale with food and beverage segment as well as the economy segment “continue to take it on the chin. Both of those segments are operating at occupancies in the 50 percentile area and have had a hard time regaining ground in the face of all the new products that have been built.” On the development side, he noted there’s also been a stronger than anticipated decrease in the
