City Cruises

Published on Thursday, January 28, 2010

Conference attendees find signs of improved hotel performance

Advance group bookings, transient travel and inbound tourism are signs that this year could have higher hotel occupancies and improved room rates by the third quarter, according to participants at the American Lodging and Investment Summit (ALIS).

Delegates to the conference held in San Diego generally agreed that the recession has bottomed out.

“There is pent-up demand and positive signs in group bookings,” said Jay Shan, CEO of Hersha Hospitality Trust Hotels.

Shah said that “Institutional investors are optimistic about REITs. We’ve just raised $155 million in new capital, but lenders aren’t selling debt eagerly at an impaired value. However we are looking for core real estate in our (northeast USA) market.”

Mark Woodworth of PKF Hospitality Research cited research demonstrating that market performance is now stable again and the supply of new room inventory is still growing despite the down market. He predicted RevPar or “revenue per available room” will grow by the third quarter of this year.

Woodworth also cautioned that “one in five hotel loans is now in delinquency.” He said there’s been a 51 percent value decline in hotel real estate since 2006.

Despite positive signs, he predicted an industry shakeout through this year, especially for properties with significant debt service from 2006 to 2008.

Another factor in making any future predictions is business uncertainty about Washington’s direction, said Ed Walter, president of Host Hotels & Resorts. “As a businessman, you’re not sure what the rules are, hence there is less hiring and less investment,” he said.

This year’s conference theme was “Light at the End of the Tunnel.”

By Kieron Kiedy

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