Don’t Throw Your Business Over the Cliff

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You don’t need to be Norman Vincent Peale to appreciate the power of positive thinking. You only need to see how negativism can lead to ugly self-fulfilling prophecies. This is a good lesson everyone in the hotel business—especially owners and developers—needs to embrace in the next few months. With the election mercifully behind us, the national conversation has shifted to the looming fiscal cliff, that odd set of tax hikes and government spending cuts that if allowed to occur, could send the economy into a major tailspin.

My guess (and perhaps it’s more a hope) is the President and Congress will reach a shaky consensus that will, best-case scenario, create a pathway to fiscal responsibility or, at minimum, produce a temporary solution that averts short-term disaster.

What bothers me more in the near future is the growing chorus of pundits and business leaders who talk only doom and gloom for 2013 and beyond. My fear is this cacophony of pessimism will spawn an atmosphere in which hotel buyers, sellers and developers and the traveling public pull back from making sound business decisions, thus consummating the self-fulfilling prophecy.

To be sure, there is some tenseness in the general economy and in the hotel sector in particular. Third-quarter results for the industry and many public hotel companies were underwhelming, and forecasts for the final quarter of the year are muted. Throw in the effects of Superstorm Sandy, lingering economic ills in Europe and slowing of Asian economies and there’s reason for concern, but not paralysis.

Citing these issues, PwC this week revised downward its 2012 and ’13 forecasts for the U.S. hotel industry. And while that may sound ominous, the outlook is still pretty rosy. Especially when you compare it to the dark days of 2009, when industry RevPAR tumbled 16.7%, PwC’s projection of a 6.6% increase in RevPAR this year and 5.4% next year don’t sound that bad.

But if you listen to the always-dour Joel Ross, 2013 will be near apocalyptic for the nation’s hotel industry. According to Ross, a tsunami of new federal regulations, combined with economic shakiness around the world, will sink the hotel industry starting today and picking up full steam next year. While the road to full prosperity is littered with potholes, there are a lot of positive signs, too. The U.S. economy is limping along, but it is limping in the right direction, although not as fast as we would like. And there’s been plenty of good news for the hotel industry: business travelers continue to hit the road; leisure guests never stopped traveling; and even group business is showing signs of life.

Unlike Joel, who’s advice for the hotel industry is to “stay safe and limit risk,” I believe the next year will be one of profound opportunity for owners, buyers and even developers. When others are cowering in the corner afraid of their shadows, smart entrepreneurs are scouring the landscape looking for a deal or two that could vanquish the naysayers and their competitors alike.

You can follow Joel and wait until who knows when for all the economic signs to align in a perfect direction, or you can use this time to be bold, yet prudent in your decision-making. Even if the government foolishly chooses to tumble off the fiscal cliff, there is no reason you or your business must follow.

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