EDITORIAL ADVISORY BOARD
Managing Director & CEO, Americas
Jones Lang LaSalle Hotels
A Quarterly Supplement
Sumner A. Baye
International Hotel Network LLC
Monty J. Bennett
President & CEO
Ashford Hospitality Trust
Credit Woes Lower Estimated ’08 Room Starts
The current credit crunch is anticipated to have a small impact on the number
of lodging keys completed in 2008, according to PricewaterhouseCoopers. The
firm estimates that rooms currently in the pipeline and scheduled for completion this year will be down by 0.5% due to a more problematic financing climate. Room starts, though, will decrease by 3.5% in ’08.
Those findings were announced last month at PwC’s 12th annual US lodging
industry review and forecast event, held in New York City. Bjorn Hanson, global hospitality leader at PwC, cautioned, however, that it is difficult to predict
the effect record foreclosures and lower consumer confidence will have specifically on the lodging industry as opposed to the economy as a whole. “We’ll
have to see how it plays out over time,” he said.
Overall, current and forecasted supply growth is below the long-term average of 2.1% recorded since 1988. When the numbers for 2007 are in, PwC estimates that supply will increase by 1.3% and by 2% in ’08. On the flip side,
demand will see a 1.5% uptick in ’08, up from 1.2% in ’07 but still short of the
long-term average of 2.1%.
The estimated US occupancy level for 2007 is nearly on par with 2006:
63.2% versus 63.3%, respectively. A dip to 62.9% is predicted this year.
RevPAR, which soared by 8.5% in 2005 and 7.8% in 2006, will moderate a
bit ( 5.5% increase in ’07 and 5.1% this year).
Also slowing slightly is profit growth. Although it will hit a record $29.5 billion in 2007, a jump of 10.5%, the pace is off from 2006, when profits rose by
18.1% to $26.7 billion. Despite the moderation, Hanson said the industry “has a
few more favorable years” ahead.—Maria Wood
Warren Q. Fields
James E. Fitzgerald
Managing Director, Hotel Investments
Principal Real Estate Investors
Joel W. Hiser
Horwath Hospitality Investment Advisors
President, Europe, Middle East & Africa
InterContinental Hotels Group
Goldman, Sachs & Co.
Holiday Inn Revamped With New Logo, Rooms
One of the oldest names in the lodging industry is undergoing a makeover.
InterContinental Hotels Group recently launched a program to give a more
contemporary feel to its Holiday Inn and Holiday Inn Express brands. Part of
the initiative is a redesign of its iconic logo, as well as revamped guest rooms
John Merkin, SVP of brand management for Holiday
Inn brands in the Americas, says now is the time to redo
the chain’s image. Currently, there are nearly 1,000
Holiday Inns in the pipeline, a number not seen since the
1970s. “Consumer demands are continually changing and
we continually need to be looking at ways to improve our
hotels and service to ensure we’re giving guests what they
want,” says the Atlanta-based SVP.
Holiday Inns now operating or under development must implement the
changes by the end of 2010, with the first newly designed properties to open in
spring of this year. In total, IHG estimates the cost to owners and franchisees at
nearly $1 billion over a three-year period. According to Merkin, IHG will
make a non-recurring revenue investment of up to $61 million to “accelerate
implementation of the relaunch.”—Maria Wood
Nelson F. Migdal
Greenberg Traurig LLP
RSBA & Associates
Donald W. Wise
Global Hospitality Industry Managing Partner
Reprint orders: www.remreprints.com.
Enter code F010810
HOTEL PERSPECTIVES IS PUBLISHED IN THE JANUARY, MAY, AUGUST
AND NOVEMBER ISSUES OF REAL ESTATE FORUM.
EDITORIAL INQUIRIES: Maria Wood, email@example.com