ATLANTA? Picking up where the UCLA Conference left off earlier in the year, hoteliers, analysts and bankers at the Hunter Realty Hotel Investment Conference held here seemed comfortable in asserting their belief that despite a projected dip in the numbers, the lodging industry gets a bill of health for the foreseeable future. ?Clearly in terms of the bottom line, it?s still there and we except it to be there,? said Randy Smith, CEO of Smith Travel Research. ?Overall profitability will continue to increase. The next five years could be some of the best the industry has ever seen.? In two days of panel discussion and presentations, speakers re-visited the core themes of the industry which where laid down in Los Angeles at the UCLA Conference. The atmosphere at the Atlanta Conference was positive and speakers generally agreed that: 1) the signs point to a soft landing 2) money is available if you know where to look for it, with greater restrictions, 3) the economy should remain strong, 4) technology will continue to impact the industry and 5) strong brands will get stronger while weaker ones will get weaker or cease to be. Widely recognized as a maturing industry, checks and balances appear to be lining up for hospitality companies, leaving the overall economy as the leading variable in the equation of ongoing profitability. Greg Miller, chief economist for Sun Trust Bank in Atlanta gave hoteliers and investors at the conference the inside skinny on what they could expect to see from the economy- at-large. Miller boiled down the economic environment into these key issues: Inflation, Domestic Real GDP growth and growth in the global economy. ?I think 1999 is going to be a headline year,? Miller said. ?Here?s the prediction: 1999 will be another strong year, but in 2000, we will see a slowdown.?Miller predicted that 1999 would result in another 3-3.5% growth for the economy with inflation going down to roughly 1.2%, which is in contrast with other analysts. Miller said he believes the Federal government will accommodate an increase in inflation up to 2% before reacting. With opec nations set to meet and growth instability in the Middle East, an underlying fear of rising oil prices is creeping through the analyst community. Miller downplayed the significance of oil price fluctuations and suggested it will not represent a problem for the lodging industry of the American economy. ?The key isn?t what?s happening in oil, it?s what?s happening in industrial production,? Miller said. ?The big driver for consumer spending is the stock market. There is a significant wealth effect coming from Wall Street.? Miller cited the fact that currently, markets capitalize if the stock market is roughly twice as big as the ?Real Economy.? Miller provided figures putting the real economy at $7.8 trillion while the stock market?s market op is roughly $14 trillion. Following Miller at the podium was Smith, who presented his statistical barometer for the lodging industry. Smith, whose STR has begun compiling monthly date from some 20,000 hotel properties, presented a statistical slideshow detailing the key numbers indicating the state of the industry. The main news was a re-hashing of what has been widely recognized for several months: that supply growth continues to outpace demand growth, but is beginning to fall off as projects planned in 1997&1998 get built in 1999. With moderating demand influencing occupancy, the projections indicate extremely modest RevPAR growth, with hoteliers looking to alternate revenue streams to maintain profitability. While supply growth is tapering, money analysts are suggesting it should be watched closely, especially in specific markets. Large Supply Growth Cities The Raleigh-Durham, NC market topped Smith?s list of cities leading supply growth with a 16.6% increase in rooms last year. Jacksonville, FL was next highest with 12.4% while Phoenix made the list again, this time coming in third with 11.2% sup
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