Kay Lang, Principal, Kay Lang & Associates and Ghassan Sader, Sader Hospitality Worldwide; Jennifer Ramsey President, Ramsey Purchasing and Andrea Dawson, Principal, Dawson Design Associates; Deborah Herman, President, Fabric Innovations and Winston Kong, Principal, Champalimaud Design

The Light at the End of the Tunnel

by Michael Schneider Email this blog to a colleague

T he theme of the 9th Annual Americas Lodging Investment Summit (ALIS) was a question on everyone’s mind: “Is there light at the end of the tunnel?” With 2009 being the worst year of the century for the hospitality industry, it seemed fitting that the conference would beg this very question. James Burba, Chair, ALIS and President, BHN recapped the past, present and perhaps the future ALIS themes: 2008 as “Annus Horribilis," “Not So Fine in ’09,” “On Track Again in 2010” and finally, “In Heaven in 2011." Mr. Burba also announced the results of their survey with 75 percent of the respondents believing that the turnaround will occur between the third quarter of 2010 and the first quarter of 2011. Welcome to the survival of the fittest period, you better hold on tight.

The conference welcome got off to comedic start with ALIS staffers dancing to American Idol finalist Stephanie Edwards belting out the tune, "Don’t Nobody Bring Me No Bad News." After this song and dance, reality began to set in with the opening sessions. Mark Lomanno, president of STR, noted that the recovery will start at the high-end; however this segment also had the biggest drop in rates. Mark Woodworth, president of PKF Hospitality Research, said that 2010 will be weak, but mentioned a highlight with New York City being the second top market (San Antonio being the first) with 77 percent occupancy rate. Perhaps the most positive remarks came from Arthur de Haast, global CEO of Jones Lang LaSalle Hotels who mentioned that there was already a 40 percent increase in transactions in 2010 over the same period in 2009. Arthur noted that the Asia- Pacific has overtaken America with a 70 percent increase in volume. Finally, Arthur mentioned that there has been so much cost-cutting to the bone with hotels that when the rate increases come back into effect, profit will shoot up. This indeed will be good for everyone.

Of particular interest to boutique DESIGN fans was the information that came from the session covering the boutique/lifestyle segment. Mike Depatie, CEO of Kimpton mentioned that in prior down cycles, boutique hotels bounced back better than any other segment. Fred Kleisner, CEO of Morgans Hotel Group pointed out that major hotel brands have helped to legitimize the boutique concept, emphasizing that a lot of thought goes into a boutique and “putting a drape over a chair doesn’t mean you’re a boutique.” He went on to say that boutiques are “no longer considered kinky” and “we’re the uncola,” referring to the notion that boutiques are mainstream but original, accepted and here to stay. Marty Collins, CEO and president of Gatehouse Capital, was the investor on the panel behind boutiques and believed that boutiques are a good business if you’re patient. He mentioned that boutiques are not a business that will grow through development, but that the customer base is growing.

Another reoccurring theme that ALIS touched on was renovation and the repositioning of a hotel for the future by creating opportunities and enhancing values with existing hotels. This theme is extremely important in our industry as new construction winds down and renovations take precedent. Bob Chitty, SVP Capital Investment & Transactions for IHG started out with a quote from Holiday Inn’s founder Kemmons Wilson: “There is no question that it’s either take charge of change or change will take charge of you.” This quote resonated well as Bob discussed the makeover Holiday Inn has gone through. David Berins, managing partner of Berins & Co gave credit to Holiday Inn’s change: “Keep it simple─you don’t have to throw buckets of money into a renovation to make noticeable changes.” Rhonda Rasmussen, vice president of WATG continued by saying that “you must choreograph the guest experience and work with what you’ve got.” Finally, Marc Heisterkamp, Director of Commercial real estate for the U.S. Green Building Council told the attendees that group sales is driving the green movement and that there are 27,000 LEED projects, 900 of them being hotels, up from 100 not too long ago. It’s evident that sustainability is catching on and the hotel properties are finally listening to their guests. After all, these times have been humbling and whatever business is out there is more than welcome. The hospitality industry’s eyes and ears are wide open, anticipating the turnaround with open arms.