The Hotel Times - June 2008 - (Page 1) BUSINESS OUTLOOK » BY STACY SILVER Set a global example lthough I' m still considered young by most standards, I' ve been through several downturns in my 16-year career in the hotel industry. I' ve learned some useful lessons from those experiences, the most instructive of which is that business is cyclical because we tend to overdo it when times are good. Our current economic situation is no different. Lending practices got out of hand and we' re now paying the price. But I don' t think we should overpay. The current mindset is that the U.S. economy is going to tank (if it hasn' t A Business is cyclical because we tend to overdo it when times are good. already), those shockwaves will be felt around the world and hoteliers are going to lose money in 2008. But are we going to lose money and do we have to? By accepting the media' s take on the business climate, are we creating a self-fulfilling prophecy? If you read the recent PricewaterhouseCoopers report on capital expenditure spending, the lodging industry will enjoy a record year of capital investment in 2008Ð approximately $5.85 billion, a 6.4 increase over 2007. Obviously these numbers were crunched in 2007, but they clearly show that most owners still have a positive feeling about both the short- and long-term outlook for the industry. Rather than go into recession mode and not spend, many are investing to take advantage of the present opportunities and for the future. Don' t get me wrong. I' m not suggesting that everything is coming up roses. Our industry has had its own share of excesses over the past few years, including overzealous sales and lax lending processes. But if the U.S. economy drives global growth (and this topic is debated hotly at international investment conferences), then let the U.S. set a good example. Property pricing is starting to return to more acceptable levels, and financial institutions are looking for more developer ª skinº in the game. There is no doubt that growth has slowed, but we are still growing. This year still will be the most profitable year in history. I' m not suggesting we go full speed ahead, but we also shouldn' t pull off to the side of the road and leave profit on the table. There is another thing we should not do: In the last downturn, we gave up our pricing power to online travel providers and consolidators, and it took us years to regain control of inventory and revenue management. We would cause ourselves great harm if we fall into that trap again. The smartest decision you can make as a hotelier in 2008 is to keep control of your pricing, manage your costs and take care of your guests. Don' t leave any profit on the table ssilver@questex.com Business development director www.TheHotelTimes.com June 2008 The Hotel Times 1 http://www.TheHotelTimes.com
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