There was a lot of negative talk at The Lodging Conference last week in Phoenix. Many of the speakers and attendees seemed spooked by the state of the world economy and what effect it may have on what has been a surprisingly strong recovery for the U.S. lodging market. As I wrote last week, everyone seemed to be waiting for the next shoe to drop.
Everyone, it seemed, except for those who probably know the best: the industry analysts who study the business for a living. Both STR and PKF Hospitality Research, specifically, painted generally rosy outlooks for the business for the rest of this year and beyond. To them, the inertia built up in this recovery is too strong to be easily sidetracked. We can only hope they're right.
In fact, in a study released during the conference, PKF-HR said industry RevPAR will rise 7.2% this year, upping its projection in June of 6.9%. Next year, it said RevPAR growth will tick up a little to 7.3%. While they acknowledge the problems in the economy, both in the U.S. and worldwide, PKF researchers believe the industry has plenty of factors in its favor, including relatively high employment among educated workers, near-record corporate profits, increased levels of business travel and most critically, low levels of hotel supply growth. Even another downturn in the economy shouldn't cripple the lodging industry.
“While 44 of the 50 markets we cover are already above their previous peak levels of demand, we do expect a slight contraction in demand in the next one to three quarters due to the economic uncertainty,” PKF-HR President Mark Woodworth told a general session audience. “But even with a mild recession, we'll still see RevPAR growth about 2.4% in 2012.”
Even the number crunchers from STR, who carry a rep as being more cautious in their forecasts than PKF or PwC or anyone else, are quite bullish on the near-term prospects for the industry. STR Vice President Vail Bloom forecast a 7.8% RevPAR increase this year and 7.0% in 2012. Even if the economy stalls, STR projects RevPAR growth of 5.6% next year.
Perhaps it makes sense to listen to these experts, who are seldom completely off base. As one attendee told me last week, after hearing several speakers moaning about the state of the world, “All this talk of negativity isn't good. If we keep it up, we'll talk ourselves right out a recovery.” An astute observation we should all take to heart.