hunter hotel conference 2017 recapThe 29th annual Hunter Hotel Investment Conference, held at the Atlanta Marriott Marquis hosted over 1,300 hotel owners and investors. The three-day event offered valuable insights into where we’ve been, where we are, and where we’re going as an industry.

Conference founder Bob Hunter started the conference off with a grand slam in his opening remarks, recalling a baseball analogy he used at last year’s event. “If the hotel economic cycle were a baseball game, what inning are we in?” This year, he said the industry is in the first inning of the second game of the doubleheader.

“And by the way, we won the first game,” Hunter said.

Here are a few more observations from Hunter 2017.

Economic Overview

We’re nearly 10 years past the start of the recession, and the outlook is positive for the U.S. hotel industry. In his analysis of the U.S. hotel industry and overall economy, Aran Ryan noted the industry is breaking records in occupied room night growth per capita.

Although business investment was low in 2015-16, consumer confidence has returned and households are spending more on travel. Household debt is low in the U.S., resulting in increased consumer spending.

Additionally, 2016’s slower global growth has begun to turn upward.

Finance Experts on the Hotel Market

The Hotel Financing panel featured a group of finance experts who discussed a range of topics related to the current market.

  • Supply growth: The New York, Miami, Austin, Nashville, and Dallas markets are seeing outsized growth in supply.
  • “Small is the new big”: Select-service hotels yields typically have a 600 BPS spread compared to 10-year treasury notes.
  • Hotel transactions: 2016 transactions were low. However, deal volume is expected to grow by 2017 year-end. The biggest funds/REITS right now are more likely to be selling hotels at this stage, not buying.
  • International appeal: Global investors (Sovereign Wealth, Germany) view the U.S. hotel industry as an attractive investment opportunity.

New Construction

As construction costs are rising 10-20% year over year, it is getting more difficult to capture the return needed to justify new construction development. While most agree the industry is in the latter part of the new development cycle, that doesn’t necessarily mean developers and owners are slowing down on new builds.

As we near the end of the development cycle, new construction and development budgets need to be highly accurate but anticipate contingencies.

New Trends, Outlook

The Hunter conference also explored new industry trends and insights, such as the growing popularity of voice activated search:

  • Machine Learning. Growing quickly, machine learning is expected to have a large impact on hospitality. Apps such as “Google Trips” will get better and smarter the more we use them.
  • Voice Activated Search. Hotel guests will be using voice activated search through Alexa and similar tools to make travel arrangements. Companies are also expected to begin using voice activated search at a higher frequency.
  • Cautious optimism. At the President’s Panel, panelists had split opinions on how good the climate currently is. The panel of leading industry experts was also 50/50 on cautious optimism for the industry’s outlook.

Based on the conference consensus, the hospitality industry is making the best of what it has right now. The ROI for select-service hotels remains strong, but construction costs continue to rise. And while some markets are experiencing supply growth, demand for hotel rooms is higher than it’s ever been. The overall tenor of the conference was one of cautious optimism paired with practical advice.