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Written by: IAHI Blog Team 2/1/2010 3:07 PM
Last week, the hotel industry gathered at the ALIS convention. While the mood was less somber than last year’s event, there is no doubt in anyone’s mind that our industry has a long road ahead for recovery. Here’s what I took away from the sessions, as well as from conversations with other hoteliers, lenders and the industry media: - The industry forecast has not improved. The "experts" do not see short-term improvement and are forecasting that growth in 2010 is only possible in the third and fourth quarters. A hockey stick improvement in 2011 is not probable and it will be a slow climb back to profitability. - Operators are far more pessimistic than the lenders and brokers that attended. Those who are closer to day-to-day operations in the industry are skeptical of improvement in the near term. - Many individuals from the investment community seemed to be armed with capital to pursue deals; however, they were looking for "in place" cash flow and I believe this is hard to come by in institutional assets. - Brokers are very frustrated with the slow pace of product coming to market due, in some part, to the overwhelming nature of defaults throughout the industry in the CMBS market. There is a great deal of "pretend and extend" underway. - There was not a broad agreement on what happens next. Industry stakeholders are viewing the industry from very different perspectives. - There is consensus that the new build market is grinding to a halt or at least significantly slowing its pace. - The brand companies are hopeful, but I am not convinced that they firmly grasp the magnitude of their franchisees’ financial distress. - There is a great deal of concern about the rapid decline and evaporation of pricing discipline. In many discussions, hoteliers seemed to think that there is no solution to this problem although, ironically, they all agreed that the situation is nearly destroying the industry cash flow.
- Hoteliers are seething that the OTA's and other intermediaries are extracting value from our assets without a solid industry response. The latest frustration centers on an initiative to draft federal legislation addressing the OTA's underpayment of lodging taxes. - There was nearly absolute agreement that our federal government is ineffective and has, in fact, greatly damaged our industry. Legislative programs that breed uncertainty and a lack of focus on the economy are pushing hoteliers to the brink. Presidential clarity and leadership is needed immediately to stop the downward spiral. If you attended, are you hearing the same laments?
4 comment(s) so far...
Re: ALIS Convention Recap While I did not attend ALIS this year, I believe that you have your finger on the pulse of what is going on out in the field. I think in pricing we are shooting ourselves in the foot and the brands are no help or are actually hurting us some times.In our hotels in 2009, we seperated pricing strategies into three buckets. Reduced pricing, level pricing with 2008 and increased prices. The short answer to the results is, that the pricing did not greatly effect occupancy percentages up or down compared to our comp sets. In markets where we allowed mangers to reduce pricing, we had no up tick in Occupancy Yield in our GM defined comp sets and rapidly falling REVPAR at flat REVPAR Yields. In markets where we held price or increased it, we had no down tick in Occupancy Yield (though some occupancy percentages went down) and while REVPAR went down slightly, our REVPAR Yields went through the roof.We increased our prices back up for 2010 in the hotels we had allowed to reduce pricing. That is not to say that our ADRs will go up substancially. It is yet to see what the effect of downward pricing pressure through the RFP season of late 2009 will do to 2010 ADRs. Also, locally you still have to be competitive for group business. Other brands instituted pricing strategies across brands that will have a ripple effect through segments of our industry for some time to come.
Re: ALIS Convention Recap
While I did not attend ALIS this year, I believe that you have your finger on the pulse of what is going on out in the field. I think in pricing we are shooting ourselves in the foot and the brands are no help or are actually hurting us some times.In our hotels in 2009, we seperated pricing strategies into three buckets. Reduced pricing, level pricing with 2008 and increased prices. The short answer to the results is, that the pricing did not greatly effect occupancy percentages up or down compared to our comp sets. In markets where we allowed mangers to reduce pricing, we had no up tick in Occupancy Yield in our GM defined comp sets and rapidly falling REVPAR at flat REVPAR Yields. In markets where we held price or increased it, we had no down tick in Occupancy Yield (though some occupancy percentages went down) and while REVPAR went down slightly, our REVPAR Yields went through the roof.We increased our prices back up for 2010 in the hotels we had allowed to reduce pricing. That is not to say that our ADRs will go up substancially. It is yet to see what the effect of downward pricing pressure through the RFP season of late 2009 will do to 2010 ADRs. Also, locally you still have to be competitive for group business. Other brands instituted pricing strategies across brands that will have a ripple effect through segments of our industry for some time to come.
Re: ALIS Convention Recap Thanks for the in depth comments. Some solid suggestions to address this critical problem.-Mark
Thanks for the in depth comments. Some solid suggestions to address this critical problem.-Mark
Re: ALIS Convention Recap Last week I was at the ALIS Convention in San Diego (January 25-January 27) and as IAHI Chairman, Mark Carrier, noted, the 2010 rebound discussed at last year’s ALIS convention is clearly not occurring. However, there were noticeably more attendees than I expected, and it seemed like they were all energized, enthusiastic, and trying to conduct business to move this bubble forward – congratulations to them for trying to make things happen. While in San Diego, I stayed at the IHG Hotel Indigo in the Gaslamp Quarter – what a treat. This hotel has service dialed-in, from the guest service agents to the GM, Chris Jones. The hotel room was spacious, comfortable and had all of the amenities you need, from bottled water to a free USA today delivered to your room and an espresso machine – all simple but noticeable. We entertained several clients in the Gaslamp area and all of the restaurateurs we spoke with gave high marks to the Hotel Indigo. One in particular stated that on every Tuesday the Hotel Indigo has a neighborhood puppy cocktail reception at the 9th floor lounge (Phi Terrace), called Canine Cocktails. The neighbors that live in the condos within a 4 block area come with their pooches to sit, relax, and enjoy a cocktail with snacks, all while their puppies play on the 9th floor from 5pm until 10pm. San Diego is a great city and the Hotel Indigo is the perfect fit, with a great location. Hats-off to Chris Jones and his staff. Ken Edwards.
Last week I was at the ALIS Convention in San Diego (January 25-January 27) and as IAHI Chairman, Mark Carrier, noted, the 2010 rebound discussed at last year’s ALIS convention is clearly not occurring. However, there were noticeably more attendees than I expected, and it seemed like they were all energized, enthusiastic, and trying to conduct business to move this bubble forward – congratulations to them for trying to make things happen. While in San Diego, I stayed at the IHG Hotel Indigo in the Gaslamp Quarter – what a treat. This hotel has service dialed-in, from the guest service agents to the GM, Chris Jones. The hotel room was spacious, comfortable and had all of the amenities you need, from bottled water to a free USA today delivered to your room and an espresso machine – all simple but noticeable. We entertained several clients in the Gaslamp area and all of the restaurateurs we spoke with gave high marks to the Hotel Indigo. One in particular stated that on every Tuesday the Hotel Indigo has a neighborhood puppy cocktail reception at the 9th floor lounge (Phi Terrace), called Canine Cocktails. The neighbors that live in the condos within a 4 block area come with their pooches to sit, relax, and enjoy a cocktail with snacks, all while their puppies play on the 9th floor from 5pm until 10pm. San Diego is a great city and the Hotel Indigo is the perfect fit, with a great location. Hats-off to Chris Jones and his staff. Ken Edwards.
Re: ALIS Convention Recap Excellent post. Thank you. www.pdfqueen.com/country/Fiji/07-04-2010.html
Excellent post. Thank you. www.pdfqueen.com/country/Fiji/07-04-2010.html