In this article, "The New Normal in 2010", Jan Freitag of Smith Travel Research describes five trends he is expecting to play out this year in the US hotel market.
Here's a preview, with Jan hinting at each of the five key factors he sees as critical in 2010 in terms of a conventional slogan ("Common wisdom") and alas, a new slogan that represents the "new normal" for the new year:
1. RevPAR recovery
Common wisdom: Fine through '09
The new normal: Back in heaven in 2011
2. Easing supply pipeline
Common wisdom: If you build it, they will come
The new normal: Ice Age in the debt markets
3. Contraction in the middle
Common wisdom: Puttin' on the Ritz
The new normal: New frugality
4. Group rates vs. transient rates
Common wisdom: Group ADR less than transient ADR
The new normal: Group ADR greater than transient ADR
5. The new value deinition
Common wisdom: It's a seller's market
The new normal: 365 days of sales
Intrigued? Click here to read the analysis behind the slogans.
Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts
Monday, March 1, 2010
Hotel property markets - rebounding?
This article in the 2010 edition of the Yearbook, written by consultant Allen Toman, sets out four key expectations for this year:
1. A continued low-level of activity for single-asset, “market” transactions. Sellers will remain reluctant to sell at current values based on distressed levels of income and given the downward pressure on capitalization rates. Buyers will focus on other opportunities, including distressed assets, discounted debt, and other asset classes.
2. Smaller ownership companies will explore either privatizing, merging or selling. This will be driven, in large part, by the debt level on properties and the timing of debt maturity. Those with high levels of maturing debt will be unlikely to replace that debt without substantially increasing their equity contribution.
3. Small and large ownership companies will explore issuing new shares or taking on financial partners in order to raise the capital necessary both to continue operations and to meet the higher levels of equity that banks will require.
4. The larger ownership companies will closely watch to see how the initial property company IPOs fare. If the equity markets continue to recover, expect a rash of public offerings involving property portfolios. Also, expect a number of existing public companies to explore using their shares as capital to acquire distressed hotels and hotel companies.
Do you agree with these scenarios?
1. A continued low-level of activity for single-asset, “market” transactions. Sellers will remain reluctant to sell at current values based on distressed levels of income and given the downward pressure on capitalization rates. Buyers will focus on other opportunities, including distressed assets, discounted debt, and other asset classes.
2. Smaller ownership companies will explore either privatizing, merging or selling. This will be driven, in large part, by the debt level on properties and the timing of debt maturity. Those with high levels of maturing debt will be unlikely to replace that debt without substantially increasing their equity contribution.
3. Small and large ownership companies will explore issuing new shares or taking on financial partners in order to raise the capital necessary both to continue operations and to meet the higher levels of equity that banks will require.
4. The larger ownership companies will closely watch to see how the initial property company IPOs fare. If the equity markets continue to recover, expect a rash of public offerings involving property portfolios. Also, expect a number of existing public companies to explore using their shares as capital to acquire distressed hotels and hotel companies.
Do you agree with these scenarios?
Sunday, February 28, 2010
California's hotel market - boom or bust?
Chip Conley is the founder and CEO of Joie de Vivre Hotels (often just called JDV), California's largest boutique hotel collection.
Closely dependent on the state's economic health, how will JDV fare now that California has hit on hard times?
Chip's article in The Hotel Yearbook is surprisingly upbeat. (Then again, maybe that's not very surprising...) Among other points he makes, he believes that in the current recesson, if consumers are staying a little closer to home, "I'd rather be a California hotelier than a Hawaii hotelier." Makes sense to me!
What do you think? Any California hoteliers out there who care to comment? How (and when) do you see the recovery coming about?
Closely dependent on the state's economic health, how will JDV fare now that California has hit on hard times?
Chip's article in The Hotel Yearbook is surprisingly upbeat. (Then again, maybe that's not very surprising...) Among other points he makes, he believes that in the current recesson, if consumers are staying a little closer to home, "I'd rather be a California hotelier than a Hawaii hotelier." Makes sense to me!
What do you think? Any California hoteliers out there who care to comment? How (and when) do you see the recovery coming about?
How will things get better (and when)?
To kick off our series of discussions, I'd like to begin with an article written by Sir David Michels, the former CEO of Hilton Group PLC and now a board member at both Jumeirah and Strategic Hotels and Resorts.
I've seen Sir David speak at industry gatherings on eight or nine occasions and I have always been impressed by his lucid overview of the issues facing the business, and his wry sense of humor as well.
Given his high-level perspective, I asked Sir David to tell Hotel Yearbook readers how he thought the economic recovery would unfold, and specifically how the recovery would take shape in the hotel industry, stage by stage.
His article is available online here.
Two things strike me about his stance. First, he believes there is pent-up demand for travel and we will start to see people travelling again in the 2nd quarter of 2010. Hotels will therefore be busier than in 2009 - but because rates won't have recovered yet, they won't be as profitable.
He also writes that "a large number" of hotels will change hands between about April and July.
Do you agree with these views?
I've seen Sir David speak at industry gatherings on eight or nine occasions and I have always been impressed by his lucid overview of the issues facing the business, and his wry sense of humor as well.
Given his high-level perspective, I asked Sir David to tell Hotel Yearbook readers how he thought the economic recovery would unfold, and specifically how the recovery would take shape in the hotel industry, stage by stage.
His article is available online here.
Two things strike me about his stance. First, he believes there is pent-up demand for travel and we will start to see people travelling again in the 2nd quarter of 2010. Hotels will therefore be busier than in 2009 - but because rates won't have recovered yet, they won't be as profitable.
He also writes that "a large number" of hotels will change hands between about April and July.
Do you agree with these views?
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