Hotel & Motel Management - December 29, 2008 - (Page 6)

» BY PAUL J. HENE Y, EDI TORI A L DIRECTOR Finding the right perspective for 2009 hat is there to say about the prospects of 2009, given the economic uncertainty of the past months? The short—and easy— advice is simply to not overreact. Unfortunately, far too many people are neglecting that advice. The reality is that we will get through these tough times, but no one really knows how long it will take. You can easily ﬁnd ﬁnancial experts on the nightly news saying this is a new paradigm, it’s a perfect economic storm, that we haven’t seen anything like this before, or at least since the stock market crash of 1929. You can just as easily ﬁnd economist-types preaching that this is just another cyclical event in the world economy. In our travels to different investment conferences, we hear a little bit of everything. At the Russia & CIS Hotel Investment Conference in Moscow this past October, Daniel Thorniley, SVP of The Economist Group, gave a grim outlook for 2009. “It, unfortunately, is going to be the worst business and economic year globally in the last 10 years, and perhaps the last W 25, and perhaps the last 50,” he said. “I think the best case [gross domestic product] for Russia in 2009 will be about 5.5 percent [growth], the mid-case might be about 5 percent, and the worst case—depending on the world— might be just over 4 percent.” At the same conference, Patrick Fitzgibbon, SVP of development, Europe & Africa for Hilton Hotels Corp., presented the other side of the equation. “I know there are projections that next year there will be falling hotel prices in Europe … but I think there’s a lot of equity interest in buying hotels at the moment,” he said. “We’ve certainly tried to ready ourselves if that does take place, with partnerships and relationships with funds and groups interested in buying hotels, and particularly with groups interested in buying unbranded hotels that may need a repositioning, may need some capital. A good time to do that is in a downturn.” The trend was the same at The Lodging Conference in Phoenix in September. “We’re in a capital market that is something that we’ve never seen in our Panelists at the Russia & CIS Hotel Investment Conference had varying views about what 2009 will bring. Pictured from left: Hotel Analyst’s Andrew Sangster, Jones Lang LaSalle Hotels’ Arthur de Haast and The Economist Group’s Daniel Thorniley. H&MM | PAUL J. HENEY lifetime; these are times that no one could really ever imagine,” said Mitesh Shah, senior managing principal and CEO of Noble Investment Group. “We’re going through a very, very signiﬁcant capital market challenge that is going to really test our ability to run our businesses.” But Gamal Aziz, president and CEO of MGM Mirage Hospitality, spun the current difﬁculties in the other direction. “As much as this represents an awesome difﬁculty … it is also going to be a time where we look back and say, ‘This was probably one of the best opportunities we’ve ever had,’” Aziz said. And Shah himself conceded the other side of the coin. “This business, as we all know, is cyclical. This business is tied to exactly how we’re doing from an economic standpoint,” he said. “The specialists in this business that have proven competencies … they have the ability to be successful over long periods of time and get through the cyclicality of the business.” Recently, when talking to Bob Eaton, executive managing partner of PKF Capital, for a related story for THE HOTEL TIMES, I asked him if he thought we’d hit bottom yet. His comment has stuck with me: “Not only am I not an economist, but not many economists can be considered very good economists these days.” It’s a reminder that we don’t know what 2009 or 2010 holds for us or for our industry. And it’s all the more reason to stick with what we know best—how to run our businesses, how to hire and keep the right people and how to serve our customers. The rest will come in due time. pheney@questex.com 6 HOTEL & MOTEL MANAGEMENT | THE ADVISOR DECEMBER 2008 www.HotelMotel.com http://www.HotelMotel.com

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - December 29, 2008

Hotel & Management - December 29, 2008 Contents Viewpoint Outlook Purchasing Companies See Green and Save Purchasing Chart Designers Target Lifestyle, Lobbies and LEED Design Chart Construction Chart Construction Outlook Bleak Lending Chart Lenders Tighten Standards in Uncertain Market 2009 Requires Changes Across the Board Brokers Chart Brands Chart Building, Developing a Brand Tight Management Will Be Key in Downturn Management Chart Year of the Turtle: Slow, Steady Will Win Race Owners Chart Consumer Trends

Hotel & Motel Management - December 29, 2008

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