NEW YORK— Industry executives and analysts at The Marriott East Side here Dec. 13 maintained the economy— and the hotel marketplace— is rapidly moving toward recovery…or maybe not! Indeed, if there was one thing many of the lodging sector’s ‘shakers and movers’ agreed on at the Jones Lang LaSalle Hotels/Proskauer Rose-sponsored day-long conference covering strategies for Handling A Hostile Hotel Environment, it was that they often disagreed on the impact as well as the duration of the recession now gripping the U.S. Opening the conclave with an overview— and outlook— for the nation and industry alike were Jones Lang LaSalle’s Alan Tantleff and Melinda McKay who offered a bevy of reasons and arguments why the national economy is expected to (continue to) contract through the first half of 2002 before picking up again in 2003. Among those factors and indicators cited by McKay and Tantleff were such observations as: • the Federal Reserve is aggressively cutting short-term rates; • long-term interest rates should stay low; • banks at this time are able— but not willing— to lend (to hotels); • new unemployment claims historically peak at the end of recessions; • inventories remain low, but excess capacity limits business-capital investment; • growth in consumer spending (is) one signal of a recovery; and • stock markets “bottom” in the middle of a recession. With specific reference to capital markets and the hotel sector, McKay and Tantleff said “opportunistic investors abound…but there are [comparatively]no sellers.” Moreover, they pointed out “capital flows to real estate are declining [and]conservatism pervades underwriting,” despite the contention hotel markets are largely in good shape…certainly in better shape than they were in 1990. Accordingly, they suggested that a wholesale capital shutdown the likes of that witnessed in 1991 – 1993 “will not recur.” Other sessions on the meeting’s agenda found a score of high-profile panelists assessing: the overall state of the industry; the condition of capital markets; operational impact of the current economic downturn; and the (ultimate) likelihood of workouts and restructurings.
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