Front Desk

Hotel economy: half speed ahead

"Cautious optimism" is such a trite expression, but it perfectly fit the attitudes of speakers and attendees at this week's NYU International Hospitality Industry Investment Conference. Some speakers believe the sky is falling and the hotel business—particularly the investment side of the business—will be in a period of pain for many months. Others, especially those in the brand business, still believe the recession will be light, if there is one at all. The consensus among the brand crowd was that hotel rates will stay strong and acquisition and development money will soon begin to flow into the industry again. All in all, one could say the hotel business is at half-speed and will probably remain in that mode for the foreseeable future, at least through the rest of this year.

The uncertain times didn't prevent a big crowd from showing up for the 30th edition of the conference, held this year at the considerably undersized Waldorf=Astoria in midtown Manhattan. According to conference chairman, Jonathan Tisch, more than 2,900 industry executives, including 10 percent from outside the U.S., were in attendance. The event raised $1 million in scholarships for New York University.

At the opening general session, Bill Marriott was generally upbeat about the near-term future, although he admitted that rates will be under pressure through the summer and beyond. He's optimistic, however, that occupancy and ultimately RevPAR will continue to grow, albeit slowly. On the same panel, Barry Sternlicht of Starwood Capital Group was less optimistic. Check that: he was downright gloomy. "I see the downturn lasting for another 18 months, and it will get worse before it gets better," he said. "Someone in the business will break ranks and start cutting rates. It's already started in Las Vegas and the bulk of the new inventory hasn't even come online yet."

Jonathan Gray, co-head of Blackstone's Real Estate Group, probably hit the right note on how to proceed in difficult times. Seeing the glass half-full, Gray said, "The greatest opportunities are when you can step in when everyone else is running away."

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