Hoteliers Cautiously Optimistic At Lodging Conference

PHOENIX— Packed with a full house, The Lodging Conference that took place here last week provided the forum many hoteliers needed to get their concerns about the industry out in the open. But, as it turned out, the mood at this year’s event was surprisingly upbeat. Even though most lodging executives said they are still waiting with white knuckles for business to return to 1999 levels, most seemed confident that by the end of the year, it indeed would. So, instead of harping on the variety of woes this industry is facing, lodging-investment executives here decided to share how they plan to get through this “short-term” business slump, and discuss strategies to better position themselves and the industry as a whole in the future. During yesterday’s “Power Panel,” executives Jim Evans of Best Western, Mike Leven of USFS, Curtis Nelson of Carlson Hospitality Worldwide and Kirby Payne of AH&LA, identified industry practices and trends— some of which are helping— and others hurting business in general. Rate erosion was named as one of the culprits holding back profitability. But don’t look to blame the events of Sept. 11 alone for that problem, as executives noted the negative rate spiral began prior to the terrorist attacks. “There’s a lot of blame regarding rate erosion on Sept. 11, but if you look before then, it had already started— that bubble (of high ADRs) had already burst,” said Leven. Nelson’s take was that discounting is preventing rates from climbing back. “You’re not going to be able to get those prices, especially if discounting continues in certain areas,” he said. Instead, Nelson noted executives should be focused on fairly dispersing inventory among various distribution channels, including travel agents, toll-free numbers and the Internet. Evans noted he is concentrating on Best Western’s current group of members, and their profitability. “Our focus right now is helping them through this depressed market,” Evans said. With regard to the rate issue, Evans said the industry had done a good job of working rate appropriately in the 1980s, “but during the last eight years, when times were good, we got so comfortable, we stopped.” Looking at the positive effects of the current environment, panelists said the market is spotted with some great opportunities for buying depressed hotel assets and noted that now— particularly over the next six months, will be a good time to look for portfolio growth opportunities. As for financing those deals, and refinancing existing hotels, the consensus from experts was that there is money out there if you are willing to work for it. Experts advised putting together projects with trusted brands in markets with barriers to entry. So expect hard times to continue in the short term, according to experts, however, there is light on the horizon. “This quarter will be like last quarter,” said Evans, “but it won’t be a terrible year.”