Fed rate increase marks new beginning for hotels
Fed rate increase marks new beginning for hotels
17 MARCH 2017 7:18 AM

The latest interest-rate increase from the Federal Reserve seems to mark a forward movement from the post-recession policies that dictated most of the past decade.

There has understandably been a lot of talk over the last couple of years about when exactly the hotel industry is going to hit the end of its cycle.

We here at Hotel News Now get to hear a lot of insightful thoughts on that topic via the data and analysis provided by our parent company STR, so I know there are very specific ways that’s tracked and measured, but I feel like we got a very unofficial, unscientific theory that we’re hitting the end this week, at least in a way.

In a move that surprised no one, the Federal Reserve decided to once again raise interest rates, marking the second time in three months the Fed has decided to do so. In the grand scheme, it’s far from the end of the world, although it’s clearly something impactful to the hotel industry and all manner of real estate investments.

But what was most interesting to me is the context in which this rate increase is being delivered. The New York Times story discussing the rate increased described it as “moving toward the end of its nine-year-old economic stimulus campaign, which began in the depths of the financial crisis.”

That might seem like a dry statement of fact to most, but it seems more then symbolic to me that in real, quantifiable ways the world and the economy are finally moving on from the calamities of the late aught. What has this cycle been if not the recovery from the financial disasters of 2008 and 2009?

The fact that we’re setting financial policy to reflect that we’re finally turning the page on that disastrous period, although hopefully not unlearning the hard lessons learned during that time, sounds to me like we’re at the start of something new. Obviously that doesn’t mean we’ve hit the definition of a “new cycle” from a key performance metrics standpoint, but it’s meaningful, nonetheless.

In the most unscientific measure possible to prove my point, doesn’t it just feel wholly different today than it has felt in recent history? Having a new administration in place in the White House goes a long way towards that, regardless of how any individual or group of individuals might feel about the direction that new administration might take.

A lot of people still will want to openly wonder when things are going to “end,” and that question obviously invites not just uncertainty but a natural pessimism that comes from expecting things to take a turn for the worst, at least in the short term.

But if instead of assuming we’re nearing the end, assume we’re at the beginning of something new. The sense of uncertainty remains but the pessimism of waiting for a collapse is replaced with optimism for what’s yet to be built.

And if we are truly at the start of a new “cycle,” doesn’t that mean the hotel industry is starting off with pretty strong footing? Think if all of that could be accomplished from here.

What do you think? Let me know via email or on Twitter.

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