What Will the New Year Bring for the Hotel Industry?

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This time next month, many of the lodging industry's top guns—brand company executives, developers, management company CEOs, equity fund managers, consultants, media and assorted hangers on—will be packing their sunglasses to head to Los Angeles for the Americas Lodging Investment Summit, the first major hotel business get-together of the new year.

Of course, the main question on everyone's lips—other than who's got money to lend—will be what kind of year 2012 will be for the hotel industry. Any such discussion has two prongs: the outlook for hotel performance and the climate for investment. Prevailing wisdom seems to be the industry will continue to build on 18 months and counting of positive growth in occupancy, rates and RevPAR. And while demand growth has been outpacing rate increases that equation could begin to equalize next year.

A much larger question is what's ahead on the real estate side of the lodging industry. We've been saying it at the beginning of each of the past three years, but it seems 2012 will really be the year a lot of hotel owners must face some hard decisions. Many CMBS loans generated in 2007 mature next year, and not every owner will be able to meet their obligations or find money to refinance their assets. The result may be a slew of short sales, defaults, foreclosures, auctions, etc. It could get ugly.

These and other weighty issues (and a few flighty ones, too) will occupy the 2,000 or so delegates for three days of panel discussions, speeches, receptions and, most importantly for many, dealmaking meetings. ALIS returns to Los Angeles after three years in San Diego. New site of the event will be LA Live, the impressive mixed-use complex in downtown Los Angeles that encompasses lodging, meeting space, restaurants, residential and retail. Conference poobah Jim Burba said in an e-mail last week advanced registrations are up 12%, and attendance should match 2007, which was the second-largest ALIS ever.

Burba also said the conference organizers have successfully solved what he calls the lounge-crasher challenge; that is, the significant number of people who don't buy a registration but hang around the hotel all day (typically in the cocktail lounge) meeting people and doing business. One perhaps-apocryphal story is that some wheeler-dealers have hired seat fillers to hold their tables in the bar until needed for meetings. A clever, if unseemly strategy.

This year, since ALIS will take up all the public space in the host JW Marriott hotel and adjacent Nokia Theater, the hotel agreed to limit access to the property to those with an ALIS name badge and photo ID. The advantage for paid attendees, says Burba, is more seating and places to do business. It will be interesting to see if the cheats find a way around this security net.

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