This has been one of those months when there has been no shortage of material for me to comment on. From a departed CEO to several announcements of new franchise opportunities for hoteliers; from a lot more development than had recently been forecast to a pending sale of another hotel REIT, it has been exciting. That’s to say nothing of the hotel labor union still acting up, becoming nastier every day, and the continued purchasing of hotels. However, I chose to comment on a recent PriceWaterhouseCoopers report on the record capital spending being done by the hotel industry. While we all know this is no big surprise given the growth of our industry during this upcycle, just to sit back and consider the strength of hotel purchasing is to feel good that hotel owners are comfortable in spending these dollars. They are comfortable that the business will continue on its growth path, despite the slight ups and downs that we currently are seeing in occupancy. The PWC report notes that the U.S. lodging industry in 2006 invested a record $5 billion dollars in CapEx, certainly a record that topped any previous spending spree. Further, the firm forecasts that this record will most likely be passed this year when $5.5 billion will be expended. The industry continues to zero in primarily on new technology and enhancements that will increase productivity, like kiosks, upgrades in laundry equipment food service, and the use of interior materials that have longer life expectancy. As I said previously this explosive growth in CapEx was well apparent at the International Hotel & Restaurant Show in New York City last November when crowds of hoteliers thundered through the exhibits showing great interest in everything on the floor. In fact, in all too many cases, they were doing their purchasing there rather than wait for this year to roll around. Even the several shuttle bus exhibitors there could not believe their good fortune at this event. One of the industry’s leading designers, Becky Jones, exclaimed to me, “I have not been here for three years. This is mind boggling.” It sure was, and as we see those CapEx dollars roll in, we know that the dam has certainly overflowed and some might say it has burst. Now add what we are seeing this year at investment conferences thus far, and PWC numbers for CapEx this year might turn out to be on the low side. The crowds of hoteliers who are showing up at these deal-fests are not holding back. And the grand-daddy of the industry investment conferences is coming up in June— the NYU event. As of last week, attendance has already achieved a record turnout, according to NYU officials. My very long years of experience in this industry tells me if this conference delivers the deals that are expected, you can bet that November’s show will exceed anything the industry has seen previously. I’m certain that most of you will agree with me, the excitement is overwhelming.
