More than 1,800 hoteliers and hospitality professionals from around the country converged on The Arizona Biltmore this week for the 23rd annual Lodging Conference. Optimism is running high at the conference, despite the expectation that the hotel industry is nearing the end of the cycle.
On Tuesday, Oct. 31, the conference’s Co-Founder and Producer Harry Javer described the myriad of reasons why industry professionals remain optimistic, from increasing global travel to rising investor profits, while also highlighting the challenges the industry expects to face: oversupply, higher construction and operating costs, property taxes and stymied tax reform, and the growing threat of cyber security, terrorism, and natural disasters.
Despite these difficulties, an economic outlook of the industry by Bernard Baumohl, chief global economist at The Economic Outlook Group, LLC, showed that in the next two years, the economy will most likely continue on its course of modest growth from 2.5 to 3 percent by 2019, with the caveat that the Federal Reserve does not significantly increase the rate at which it is raising interest rates. JP Ford, SVP of Lodging Econometrics, presented projections that room growth rate will increase 2.5 percent in both 2018 and 2019. Most new construction remains in the upper midscale, upscale, upper upscale, and upper midscale segments, and the biggest markets are New York City, Houston, Dallas, Nashville, and Los Angeles, although secondary markets are expected to be hotbeds for development next year. Ali Hoyt, senior director of consulting and analytics of STR, said that hoteliers should expect demand to continue outpacing supply, leading to continued modest RevPAR growth for 2018.
