Optimism Lights The Way At ALIS

LOS ANGELES, CA— While it may or may not be accurate to say hope springs eternal, a considerably more legitimate truism on display at the 2004 edition of the Americas Lodging Investment Summit here could be optimism runs rampant. What’s more, there were similarly concerns aired by some maintaining said optimism might well be running just a bit too “rampant” to suit the tastes of a number of the lodging industry’s more conservative development and investment veterans. Specifically, more than a few attending executives questioned whether the “newer” players entering the hotel market are exercising sufficient caution and paying heed to the industry’s recent history. Most certainly, there was more-than-ample evidence of investor interest returning to the hotel sector in a big way, what with those hotel executives and industry analysts packing this year’s annual conclave at the St. Regis/Century Plaza hotel complex on the outskirts of Beverly Hills largely agreeing the economy— and the lodging business— is definitely on the road to recovery following two years of truly trying times. Opening the annual meeting with an in-depth look at the lodging arena’s recent past, its present, and its near-term future were a bevy of leading marketplace advisors/analysts taking center stage to deliver a wide-ranging Economic & Performance Outlook. As such, Deloitte & Touche LLP Managing Partner/Hotels & Resorts Marvin Rust, Smith Travel Research CEO Randall Smith, PricewaterhouseCoopers LLP Global Industry Leader/Hospitality & Leisure Bjorn Hanson and PKF Consulting Executive VP Mark Woodworth explained how the tone for this year’s apparent upturn (domestically as well as worldwide) was ordained by the nature of— and numbers generated by— business in 2003. To hear Smith tell it, the industry is currently in the process of posting several consecutive business-tracking periods during which demand growth has been consistently outstripping the pace of new supply coming on line. On the other hand, 2004 may not be without its (potential) pitfalls and problem areas. Along these lines, for instance, it was indicated by several on the opening day’s agenda a number of cities— notably Boston and San Francisco— would do well to hold off on any appreciable increase in new supply… at least until demand and room rates in those gateway cities recover more fully. Ultimately, the panel agreed that— with supply growth stabilized, demand approaching record levels (by mid-year), occupancy levels rising gradually-but-steadily, an increasing degree of control over rates, and a generally rebounding economy— the long-term outlook for the industry deserves to be optimistic… though some of the really significant improvement in the industry’s fortunes may still be as much as a year away. Perhaps the real insight on the current state of the industry— and its fortunes going forward— was served up during the course of a subsequent Hotel Leaders’ Town Hall session presented on the second day of the annual meeting. Moderated by REH Capital Partners Chairman/CEO Francis Nardozza, this “view from the top” was presented by Starwood Hotels & Resorts President/COO Robert Cotter, Best Western International President/CEO Thomas Higgins, Wyndham International Chairman/CEO Fred Kleisner, Choice Hotels International President/CEO Chuck Ledsinger Jr., InterContinental Hotels Group CEO Richard North, and Carlson Hotels Worldwide President Jay Witzel. In a seeming show of unanimity, each of the assembled leaders agreed the industry is definitely on the way back… and 2004 shapes up as being a better year than 2003. As for those business models expected to chalk up the greatest gains via this recovery, most of the assembled leaders on stage pegged franchising as being a solid bet going forward. Offering testimony to just how much the past influences the present, Witzel noted: “In reality, the hotel story of 2003 was actually a tale of two years— the first half [being clearly distinc