Dealing with the new normal at the annual Americas Lodging Investment Summit
On January 22-24, hotel owners, managers, developers, consultants, financiers, and various stakeholders gathered to discuss the outlook for hospitality in the year ahead. This year’s conference theme “Dealing with the New Normal” opened up a conversation around the biggest questions facing the industry, offering insights into new trends and opportunities.
Our favorite ALIS 2018 speaker…
“Thomas J. Pritzker, Hyatt’s Executive Chairman, accepted a lifetime achievement award and gave an interview afterwards. His message of positivity, humility, gratitude, giving credit to the team he works with, excitement about things to come, focus on family, and desire to help people sets an excellent example and reflects outstanding character.”
– Chris Parker, President & Co-Founder of Innvision
Opening day sessions were packed with insightful discussion, with hotel industry leaders offering perspectives on the numbers from 2017 and looking ahead to 2018. As the conference continued, Simon Hobbs interviewed five subject-matter experts on the economic impacts they anticipate from the new tax law over the next several years.
Industry leaders are confident the Tax Reform Act will be good for the U.S. economy and hotel business in 2018.
Hotel sales transactions may be challenged because owners are enjoying operating profits and attractive refinancing options. When you do find an opportunity to invest, there is capital to lend in hotels, since they are higher-yield assets relative to many other real estate segments right now, and interest rates are still relatively low.
Rising costs and interest rates from a tight labor market may affect hotel profitability. However, hotel room supply and demand is expected to increase in relative equilibrium, allowing average daily rate and RevPAR to grow 2-3 percent. According to forecaster projections, occupancy should remain at a very high level.
Notable Industry Trends
The above takeaways were by no means the only topics discussed. Here are a few other industry trends noted at the conference:
- Artificial Intelligence (AI) and robots will increasingly become a part of hotel operations, collecting data we’ve never been able to access before.
- As the playing field levels and illegal hotels face hurdles, Airbnb’s growth is slowing.
- Exceptionally low unemployment, combined with a restrictive immigration policy, poses challenges to both the economy and hotel industry growth.
- Continued low interest rates have lengthened the recovery, and the new Tax Act will add strength.
- Blockchain will create more direct client-user and service provider relationships. This technology is expected to disrupt the “disrupters,” who have largely become intermediaries.
- Consolidation among brands, such as Wyndham’s acquisition of La Quinta, is likely to continue in order to create needed scale and leverage.
At ALIS, panelists and conference attendees alike shared a sense of optimism that 2018 will be a good year for hospitality. As we look ahead, it is encouraging to see the post-recession cycle of growth in the U.S. economy and the hotel industry is poised to continue this year.