Two years ago, Marriott's Arne Sorenson made headlines at the New York University International Hospitality IndustryConference by saying he was “wildly optimistic” about the near- and long-term prospects for the U.S. hotel industry. At this year's NYU conference, which is underway this week at the Marriott Marquis on Times Square, Sorenson was more circumspect in his assessment of the state of the lodging business.
In reacting to turmoil in the stock market in the wake of last Friday's dismal jobs report, Sorenson said yesterday, “The markets are not infallible but they are a powerful read on future expectations, and right now they are more cautious about our future than they were a few months ago.”
Sorenson wasn't alone during the first day of the conference. Many speakers spoke on one hand about the greatfrom the performance side of the hotel business, but nearly all of them tempered their remarks with the inevitable what ifs: What if the EuroZone collapses; what if Washington can't learn how to govern again; what if, as Sorenson noted, the U.S. falls off the “fiscal cliff.”
These comments summarize in a nutshell the prevailing mood of the conference and the industry as a whole: Everyone is celebrating the impressive gains in occupancy and rate but they're all waiting for the proverbial shoe to drop in situations beyond their control. Unfortunately, that sentiment extends way beyond theindustry into all aspects of corporate life in the U.S. Perhaps cowardly, perhaps wisely, companies large and small are holding off making big decisions, big expansions and big purchases until clarity returns to the marketplace. In the hotel sector that kind of thinking translates into a sluggish transactions market further creating anguish among industry executives.
Here's a news flash: Clarity may never return and we may face a future of perpetual flux where dangers lurk around every corner. However, smart business people and smart hotel owners and operators need to understand that may be the case and they need to find ways to still do business—including buying and selling hotels, repositioning existing assets and even venturing back into new. Those who don't will be consigned to the scrap heap of irrelevance.