Mood of Hotel Investors and Operators is Euphoric
David M. Brudney, ISHC, a nationally recognized spokesman for hotels and a veteran with four decades of experience, is the principal of David Brudney & Assoc. of Carlsbad, CA |
By David M. Brudney, ISHC, February 2007
Although hotel development in China and India
dominated the dialogue, speaker after speaker told the record attendance
of 2,500 at The Americas Lodging Investment Summit (ALIS) in Los Angeles,
that both the U.S. and global economy were good and all agreed that this
was a very good time to be in the lodging business.
Can you blame them? Buyers of properties
priced $10 million plus paid $204,000 a room in 2006 compared to $165,000
a room in 2005. Smith Travel Research reported a 7.0% growth in average
rates, 7.4% growth in RevPAR, aggressive pricing and higher profits.
The luxury market sector received the best reviews
of all with the highest demand growth (4.9%) and average daily rate growth
(8.9%) for twelve months ending November 2006, according to Smith Travel
Research.
How long will these "good times" last? Most
agreed through 2008, barring any repeat of 9/11. Using a baseball
metaphor, speakers were asked, "What inning are we in"? The consensus
appeared to be the fourth inning for the overall industry, but several
industry icons and leaders thought it might be only "the second inning"
for the luxury sector.
Bill Gates and his partner Saudi Prince
Alwaleed bin Talal thought the luxury sector future looked healthy,
too. They just paid $3.37 billion to buy Four Seasons Hotels.
J.W. "Bill" Marriott, Jr., Chairman and
CEO, Marriott International, Inc., thinks the U.S. and global economy are
"doing well" and "should last for awhile." Full employment is a good
sign. "(Control over) oil is the key," Marriott said. "It keeps
inflation down."
Concern over U.S. Losing World Tourism Market
Share
Marriott told a standing-room only ballroom that
the U.S. is losing customers to other destinations because "we make it
too hard to get here" due to lengthy visa and unfriendly entry processes.
He cited figures indicating the U.S. welcomed 26 million international
visitors in 2000 and only 21 million in 2005. He called for the U.S.
Government to spend more money to "fix the visa problem", making the process
more seamless for those - - frustrated now by the costs and delays - -
who want to visit the U.S.
Jean-Claude Baumgarten, president, World
Travel & Tourism Council, warned the U.S. travel and tourism industry
that not enough money is being spent promoting our destination. Baumgarten
said U.S. share is at an all time low: 35 percent drop in inbound visitors
since 1992, representing a $286 billion loss in revenue, jobs and taxes.
He recommended a much larger promotion budget and new biometric technology
for seamless safe travel. He praised the work being done by industry
today in "restoring America’s travel brand."
Other notes and observations from ALIS 2007:
Issues, areas of focus, key messages delivered.
I can’t remember an ALIS conference where so many industry leaders used
the expression, "enhancing the guest experience" and the importance of
"delivering on the promise." Speaker after speaker gave testimony
on their commitment to "listening to our guests," and that more dollars
are being earmarked for customer research and customer relationships.
Attendees heard a lot of "we’re positioning the
(our) brand to drive development" throughout the conference.
Social Consciousness, the Environment and Immigration
Andrew Cosslett, CEO, InterContinental
Hotels Group PLC spoke passionately when he challenged the industry to
make a new and real commitment to social consciousness and responsibility.
Others gave real testimony on new environmental-designed products.
Bill Marriott shared his strong opinions
on immigration laws and their impact on hotel jobs: "someone employs 13
million illegal immigrants in the U.S. If we pass laws to deport
them, you'll hear a huge sucking sound when they leave. Where can
we find the people to replace them? (If we can’t) big time inflation
will be the result."
Paul Brown, President, Expedia, Inc. Partner
Services Group, voiced concern over possible airline consolidation and
its impact on U.S. hotels. "Fares will increase," said Brown, "and
the more money travelers spend to get there (destinations), the less they’ll
have to spend on hotels."
Barry S. Sternlicht, Chairman & CEO,
Starwood Capital Group, said he was troubled by increased airfares and
the negative impact on business travel. On the development side he
pointed out "there’s lots of product announcements and then delays after
they realize that due to construction costs, the numbers don’t work."
When asked about where he saw the most opportunity, Sternlicht replied,
"if I were 25 years old, I’d move to China or India and make my fortune."
Charles A. Ledsinger, Jr., Vice Chairman
& CEO, Choice Hotels International, said that the franchisee is Choice’s
number one customer. Resource allocation is critical. "Are
we spending the money wisely? What is the cost of delivering business?
We want to keep our owners happy," Ledsinger said.
Matthew J. Hart, President and COO, Hilton
Hotels, said that time-share and private residence was a good business
for Hilton to be in. "(It’s) a way for Hilton to get more management
contracts", Hart said.
On the lighter side, visionary Ken Dychtwald,
President and CEO, Age Wave, entertained the attendees with his message
that the 21st Century will be ruled by the "new" old, that it’s time to
"retire retirement" and that we have the potential to live to the age of
120 to 140. "Age 60 is no longer old," Dychtwald told the audience.
Living longer, he said, "will allow us to reinvent ourselves." He
predicted that people aged 70 and 80 will be starting new careers, returning
to school, and pursuing long-suppressed interests. "We’re looking
at an incredible next two decades", Dychtwald said.
Kudos, once again, to ALIS Chairman Jim Burba
and his great Burba Hotel Network team for putting on an excellent conference.
© Copyright 2007
About David Brudney & Associates
David M. Brudney, ISHC, is a veteran hospitality sales and marketing professional concluding his fourth decade of service to the hospitality industry. Brudney advises lodging owners, lenders, asset managers and operators on hotel sales and marketing "best practices" and conducts reviews of hospitality (as well as other industry) sales and marketing operations throughout the U.S. and overseas. The principal of David Brudney & Associates of Carlsbad, CA, a sales and marketing consulting firm specializing in the hospitality industry since 1979, Brudney is a frequent lecturer, instructor and speaker. He is a charter member of International Society of Hospitality Consultants. Previously, Brudney held hospitality sales and marketing positions with Hyatt, Westin and Marriott.
Contact: David M. Brudney, ISHC, Principal
David Brudney & Associates
Carlsbad, CA 92009
Phone: 760-476-0830
Fax: 760-476-0860
Email David Brudney
Web Site: www.DavidBrudney.com
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