Is there any concern with a tightening lending environment slowing down development?
It’s really market by market. We were talking to a guy out in California saying, “I can get anything I want.” We talk to a guy in South Florida and he said, “Lending is pretty tough.” It’s somewhat regionalized, but, because we’re using our balance sheet in such a significant way, we’re still finding banks lending 65 or 70 percent, which is where they were a year ago.
Overall, I’m hearing from developers that it may be getting a little harder. I haven’t seen anybody say, “I’m not going to get it done.” It’s just taking them longer, for whatever reason. The condo concern in Miami has a lot of bankers nervous. That’s what’s affecting south Florida. Then every other market sort of has its own story. But, it’s still pretty positive.
You can say what you want about the stock market, but fundamentally there is no reason we don’t have a really good 2016 because all of the things that we look at are up. The concern is that with all the noise—with the election, oil, and China—people can get a little flustered. We might have a little slower start than we wanted because of all of the things that are being said. We think it will all straighten out over the next month or two. Then you’ll be in what is a little bit less than last year. It will move from 7 to 5 [percent RevPAR growth]. That’s less, but 5 is a damn good year in the hotel business.
So what’s coming up for Choice?
In a couple of weeks, we’ll probably have a fairly significant announcement about where we’re going with vacation rental. It will primarily be a B2B platform that would allow consumers to rent units from third-party vacation rental management companies. With it, we’re doing two things. One is we’re putting customers in their hotels, giving their customers Choice Privilege points that they can use for another vacation or use within our hotels. And we’re providing these companies with a technology platform that they need desperately to help run their businesses.
We’ll officially declare the launch, but we’ve been working it for a year and a half. We’ve got a number of customers that have been on for a while. What we’ll announce is a bunch of new people that have been signed, but then we’re off to the races in terms of signing people. If you look at that, and everybody is asking, “Well, is that defense to Airbnb?” I’m like, “Maybe.” If we’re B2B, it’s not a very big step to go B2C.
How will this match up against Airbnb?
The only difference is there’s a vacation rental management company between the consumer and us. It’s an important reason, because that’s how we ensure the keys are dropped off in an appropriate fashion, the rooms are clean and somebody is taking care of them, and the place is in decent condition. If something goes wrong, somebody takes care of it.
Airbnb and its ilk have to play by the same rules we play by, but other than that, I’m pissed we didn’t think of doing what they’re doing first. If something works, clearly you want to look at it. It’s not lost to me the valuation these guys are getting. At the same time, it’s that handoff to the customer that we’ve got to figure out.
What are your thoughts regarding the news of Carlson exploring strategic options?
If it comes up officially, we’ll take a look because we look at everything. [With Starwood], we were one of the later companies to start with, but we didn’t get very far. Because of our ownership, we’re very disciplined about what we do. And we don’t really have to do anything. Our performance over the next five years is going to be awesome if we just carry through on what we’ve got. If we see a great strategic opportunity with a fair pricing, which is always the question mark, then we’ll definitely take a look.
