Morris Lasky
(ROME, ITALY) - Despite plenty of cash available for new development, global hoteliers are bracing for a second straight year of rough waters in their industry, 450 delegates from 50 countries were told at the close of the sixth annual International Hotel Conference in Rome."We are into something now that none of us has seen before - essentially, a world crisis within the hotel industry," says Morris Lasky, conference chairman and president of Chicago-based Lodging Unlimited Inc. "I can also tell you from past experience that we will come out at the other end. We will turn around."
Wolfgang Neumann
Financing isn't the problem, as it is in almost every other commercial real estate development sector, says Wolfgang Neumann, Hilton Hotels' area president for Europe. "The perception is that there isn't money out there," he says. "On the contrary, money is still out there. There is lots of cash. Pension funds have to continue to invest."But new development projects "will take longer to come on stream." He says Hilton's development pipeline in Europe is "bigger this year than last year, despite the credit crisis that started a year ago."
James Chappell
James Chappell, managing director of London-based STR Global, told conference delegates meeting at the Hotel Cavalieri, "the financial market uncertainty will cause 2009 to be worse than we previously thought, which will probably mean the downturn will last longer and be more severe than expected."He adds, "The news is not good, but the U.S. and European markets are in the correct place for the current cycle." Chappell says the European hotel market "is dropping while business in Asia Pacific, the Middle East, Africa and China is doing much better."
He predicts corporate travel generally will slow down during the rest of 2008 and the first part of 2009.
George Rafael
George Rafael, managing director, Rafael Group S.A.M. based in Monaco, doesn't think the values of most major hotel properties will suffer from the financial crunch."I have to refer to my most recent experience with Express Hotels," he says. "If I look at what has happened on the stock market, there is no correlation whatsoever to the value of our properties. We own our hotels. We have trophy assets. We have icons. So these values will remain."
Faced with a worsening financial situation, Paul Brown, president, Expedia North America and Partner Services Group, Expedia Inc. in Bellevue, WA, advises hoteliers to "maintain a tremendous amount of flexibility in your decision-making process and business model; flexibility in your cost structure; and (also) flexibility in your revenue management and pricing structure."
Paul Brown
Neumann of Hilton Hotels Europe agrees. "It's easy to drop rates but it takes years to get them back," he says. "It is very important for hotels to maintain their rates and maintain the value proposition to the customer in accordance with the hotel brand."Andrew Katz, managing director, Axios Hospitality Real Estate - The Blackstone Group, New York, says "speaking as an asset manager and an owner," fellow hoteliers "need to work (better) with your operators. You need to push them to get out of them what you are paying them to deliver."
He adds, "Make sure you keep good teams in place and not allow a lot of turnover in your managers. We'll get through it, but clearly, we've got a tough year ahead of us."
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