Fiscal Cliff Deal Brings Some Clarity, Confusion and Hopefully a Little Confidence

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If a story yesterday from U.S. News is right, the remaining uncertainties left from the last-ditch Fiscal Cliff deal will mean a continued slowdown of business investment. But several hotel company executives I spoke to before the deal was even reached told me they were optimistic and expected to grow through additional investments this year.

Lauris Molbert, CEO of TMI Hospitality, said the more certainty you have the better you can forecast and the more conviction you can have. But his company has eight hotels under construction and another eight planned for this year (sites and franchise agreements already secured). The majority of those plans were set in motion long before President Obama was reelected and the Fiscal Cliff deal was reached.

“The election being over removed one big uncertainty,” says Bruce Lowrey, managing director of RockBridge Capital. The Fiscal Cliff deal removes some more, but still leaves debates over the debt ceiling and spending cuts coming to a head in March. But Lowrey says “there are always unknowns and you have to live with that, but it’s doable.”

The more clarity business owners have, the better decisions they can make. Few on either side of the aisle believe the Fiscal Cliff deal is perfect, but it does provide some clarity. The landscape may not be clear, but it’s less hazy than it was on Dec. 31. The author of the U.S. News story suggests one argument for businesses would be to just “suck it up” and invest, despite the remaining challenges. There’s always risk with any investment, hence the reward side of the equation.

That’s exactly why some hotel developers have continued to build, why some owners have invested in property improvements, why some investors have continued to buy and others have joined the fray and will in 2013 (see our upcoming outlook story in the January issue and featured online Jan. 15).

Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, is quoted in the story saying businesses spend money when they see revenues increasing. RevPAR has been climbing for more than two years and is forecast to again this year. It’s why savvy hoteliers and investors have remained active and why 2013 will be a busy and successful year for the industry.

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