Hotel & Motel Management - December 10, 2007 - (Page 35)

www.HotelMotel.com/digital_edition HotelMotel.com | H&MM December 10, 2007 News 35 Horizon strong, despite the credit crunch and any recessionary rumblings, and while supply continues to Continued from page 1 grow, there’s enough uptick in dethe volatile stock market, rising mand to offset that rise. consumer debt and skyrocketing “Occupancy will improve fuel costs cast a shadow over the slightly and average daily rate will proceedings. plateau slightly,” Lomanno said. The panel of industry experts While supply is growing (2005 presented information on season- to 2006 saw 75,000 new guestal performance and future trends rooms added to inventory), the to help hoteliers plan future strat- net growth was just about 10,000 egies. Participants were Bruce rooms when one balances the new Ford, senior v.p. of sales, Lodging rooms minus those retired. Econometrics; Mark V. Lomanno, “We’re beginning to wonder president, Smith Travel Research; if there’s a replacement cycle,” LoWarren Marr, director, manno said. PricewaterhouseCooThe luxury and midpers LLP; Douglas K. scale-without-food-andShifflet, president and beverage segments exc.e.o. of D.K. Shifﬂet & perienced the strongest Associates Ltd.; and Peter growth in development Yesawich, chairman and and consumer demand. c.e.o., Ypartnership. “Consumers are First, the good news: spending twice as much Lodging demand in the Lomanno money in these segnear term will be fairly STR ments than they were Marr PWC Yesawich YPARTNERSHIP seven years ago,” he said. “That’s amazing.” Lomanno reported 200,000 rooms under construction. While that number might raise “oversupply” ﬂags, it’s tempered by the current credit crunch, the longer lead time to build—now at 16 months, on average—and the number of rooms closing, he said. Between 1990 and 1998, 15,000 rooms closed per year. From 1999 to 2003, that number doubled to 30,000 rooms, and in the past three years, that ﬁgure has grown to 57,000 rooms per year (a ﬁgure that is skewed slightly when the effect of Hurricane Katrina is factored in). As for rate, Lomanno projects 5.2-percent growth in ADR for 2008. This year was a milestone for the industry in that, for the ﬁrst time, average ADR will top $100. The ﬂurry of mergers and acquisitions activity of recent years will level out, Ford forecasted. The Blackstone Group’s $26-billion purchase of Hilton Hotels Corp. this year most likely was the last large-scale acquisition the industry will see this cycle, Ford said. Nearly 700,000 rooms and 5,200 hotels are in the development pipeline, Ford said. 2009 will be the high water mark for new rooms inventory, with 165,000 new rooms slated to open. He said 138,000 rooms are projected to open in 2008. Sixty percent of those will be in the upscale and midscale-withoutF&B segments. “Luxury will lead all segments in RevPAR growth,” Marr said. “Midscale without F&B will have the highest supply and demand growth.” “Continue to renovate your hotels because new demand is coming,” Ford said. Conversely, the “cost of capital is rising and credit is not as available today.” On the consumer side, Shifﬂet and Yesawich referenced the growing pressures on consumer spending, like cost-of-living increases, lagging incomes and escalating debt. “Discretionary income is evaporating,” Shifﬂet said. “Gas prices are driving leisure travelers to stay closer to home.” Yesawich put the numbers in perspective by adding what he called a “dose of reality” to the conversation. He labeled the state of the current consumer public as “high anxiety.” psheehan@questex.com CIRCLE NO. 109 CIRCLE NO. 102 http://www.HotelMotel.com/digital_edition http://www.HotelMotel.com http://www.vistarez.com http://www.haventrustbank.com

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - December 10, 2007

Table of Contents News Wildfires test hotels' emergency plans LIIC roundtable: Capital available for hotel projects Departments Perspective Letters to the Editor At Your Risk Family Business Matters Sales Clinic On Finance Satisfaction Trends HotelWorld Update Events Trends & Stats Special Report H&MM's "year in review" tackles the top seven in 2007 Transactions Consumer Insight Travelers rank free breakfast high on must-have items Hot Products IH/M&RS Editors' Choice Award winners Construction Spending up, costs steady in construction Design Window treatments Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - December 10, 2007

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