Labor woes dampen positivity on first day of Lodging
Labor woes dampen positivity on first day of Lodging
26 SEPTEMBER 2018 7:45 AM

Editors recap the opening day of The Lodging Conference with takeaways, quotables and more highlights from the event.

PHOENIX—Attendees at Day One of The Lodging Conference were mostly positive about the state of the industry, but they did bring up a few concerns.

Conference founder Harry Javer welcomed attendees by highlighting the positives the industry is currently benefitting from, such as a strong U.S. economy, low unemployment and the fact that deals are still getting done. But he also called attention to the biggest concern that came up multiple times throughout the day: labor.

“We are in a healthy economy,” Dave Johnson, chairman and CEO of Aimbridge Hospitality said during the “A view from the top” panel. “But the one thing that keeps me up at night that could derail this economy is (a worker shortage).”

Another topic of conversation at the conference was new brands. Best Western International launched two boutique brands—Sadie and Aiden—and gave more details about them during a reception and in an interview with HNN’s Jeff Higley.

HNN also met up with Choice Hotels International’s Anne Smith, VP of brand management and design, to hear more about Clarion Pointe, an extension of the Clarion brand. Check back at HNN for a video interview with Choice’s Smith.

Day One recap video

Photo of the day

Attendees of the 2018 Lodging Conference’s evening reception pose in front of a green screen at the reception’s photo booth. (Photo: Bryan Wroten)

Quote of the day
“Years ago, somebody told me ‘cheap is expensive.’ When you start looking at development—especially how risky it is, and we talked about costs being so high—at the end of the day, if you have the right people, the right team, the right brand, it can work out well. My experience is going cheap, in the long run, is going to be more expensive.”
—Vinay Patel, 2018-19 secretary of AAHOA and president and CEO of Fairbrook Hotels, speaking on “The Current Pace of New Construction” session.

Tweet of the day

Slide of the day

Ali Hoyt, senior director of consulting and analytics at STR, offered a look at demand growth during the “Industry overview” at the start of The Lodging Conference. (Source: STR)

Editors’ takeaways

You can look back to the 1992 presidential election to find the origin of the unofficial theme of this year’s Lodging Conference. That’s when James Carville coined the phrase “it’s the economy, stupid!” as he helped Bill Clinton ascend to the nation’s highest office.

I couldn’t help but think about that as I chatted with attendees or listened to speakers on panels or giving presentations. CNN published a story the other day about how most of the general population don’t view the economy as the most important issue facing the country.

Based on the comments heard around the grounds of the iconic Arizona Biltmore, the majority of hoteliers take the opposite view: The economy steers the ship.

The CNN story points out that the unemployment rate in August was 3.9% and the gross domestic product increased 4.2% in the second quarter. There is a correlation between those numbers and the 102 consecutive months of RevPAR growth, as well as the all-time highs in occupancy and average daily rate.

We heard throughout the first day of this year’s conference that tax cuts and a record number of travelers have fueled the longevity of this hotel cycle, which is now well into its eighth year and showing no signs of a letdown.

The happy feeling started with quick-hitting presentations from the number trackers at the beginning of the day and continued with the “View from the top” general session that at times bordered on downright giddiness. Only economist Bernard Baumohl tempered the enthusiasm by telling attendees they can expect a “material slowdown” in the economy in the second half of 2019.
—Jeff Higley, Editorial Director

Hoteliers continue to have M&A on their mind. They see there is still room for more consolidation in the industry, whether it’s among brands, management companies, private equity owners or (maybe) even in the REIT space.

The industry fundamentals show continued stamina, at least through the next year and a half. The pace of M&A picked up this year compared to 2017, but it was still not as much as some expected given the amount of private equity capital waiting on the sidelines.

Those who are in the position to acquire smaller companies are definitely watching for their next opportunity, but at this point in the cycle, they’re looking for Goldilocks opportunities. After the M&A activity we’ve seen so far, I’m hearing that we likely won’t see as many smaller or single brand acquisitions, as there are fewer of them around now.

Another consequence of all the M&A activity among management companies is owners who are looking for smaller, more nimble operators will have a harder time.

There’s still a question of whether the industry will see further M&A among REITs. The RLJ Lodging Trust and Felcor Lodging Trust deal showed the industry that it can happen. While the Pebblebrook Hotel Trust/LaSalle Hotel Properties deal is further evidence of that, these two REITs are kind of a special case given their linked histories and their similar portfolios.
—Bryan Wroten, Senior Reporter

Labor was a major topic on Day One of The Lodging Conference. Panelists on the “A view from the top” session discussed concerns around labor, as well as technology to make operations easier.

The biggest takeaway from all speakers was the need for change and for hoteliers to attract and retain talent.

Eric Danziger, president and CEO for Trump Hotels International, underscored this point by saying the hotel industry shouldn’t be worrying about new technology and system improvements if they don’t have the right people to fill roles in a hotel.

“We can kind of turn all those off if we don’t have people for the future to work in this business,” he said. “(We have to) make it an appealing business for them (to be) attracted to, stay with and grow with.”
—Danielle Hess, Reporter

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