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About Jerry
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Jerry Merkin has spent more than 40 years in business-to-business publishing with such titles as FLOORING, HOTEL & MOTEL MANAGEMENT and HOTEL BUSINESS. Now retired from publishing, Jerry devotes much of his time to consulting for GLM, LLC, specifically on the International Hotel/Motel and Restaurant Show.
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Jerry's Blog
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Aug
23
Written by:
Jerry Merkin
8/23/2010
Yes, the hotel industry remains in recovery mode, but there are constant reminders of its fragility. At best, anyone in a position to call him or herself an analyst agrees that the 2010 end result for the hotel industry will be measured in a very few plus percentage points, with a few more upward points to follow in 2011.
The here and now is still fraught with many challenges, both real and psychological. Looking back on the 2nd quarter, results were positive for the hospitality industry, but looking forward, the skies are suddenly cloudier. Talk in July and early August of a double dip recession and deflation was a setback for the hotel industry, which had been looking for positive news, especially on the employment front, to further drive occupancy from business travelers in particular.
It’s also a market characterized by pockets of success. The NYU Investment Conference in June demonstrated the divide: a positive mood among brand executives was tempered by alternatively negative views held by many multi-unit owners. At one coffee break, Billy Meyer of Meyer Jabara Hotels and Ron McCauley of Park Place Hospitality Group pulled me aside, to say that all the positive news you have been hearing is just not the reality for all too many. These are two very senior hotel executives with good track records, so what they are saying has to be taken seriously.
With respect to 2nd quarter results, Marriott’s strong earnings led the pack with most other major brands following suit. It was also a pretty good quarter for most of the hotel REITS. Much of the brands results included foreign operations so it was hard to calculate just how good domestic results were, but it is obvious that as you parse the data that many of the larger cities in the US are doing well, and in particular, New York City, which not only raised its occupancy to close to 80 percent, but was also able to effect rate increases.
In checking about, New York hotels are pushing the $300.00 ADR level with more increases coming as Fall reservations hold up. No question, in tourist and business travel, New York’s star is shining brightly, and it is lifting the other boroughs - Brooklyn, Queens, the Bronx and Staten Island along with the Long Island and Northern New Jersey suburbs.
Boston and Washington DC are coming on too with better occupancy and rate news making the Northeast the hottest region in the country.
But the vast amount of properties across the country are going to need increased business travel, and this will only come as employers show their confidence in the economy and bring on more workers.
With signs that credit continues to be more accessible, look to see an increase in sales of “foreclosed” properties in the second half, and even modest development, mostly in midmarket as SBA loans appear to becoming more available.
The dollars will follow the hotter markets: brands have caught on to the big city growth and are increasingly looking to expand their property strength in this area with multiple properties almost on top of each other. Marriott and IHG and Hilton have been very aggressive in this style of brand presence, especially in Manhattan, with Starwood looking to catch up. The property grab in the Northeast in the next few years are going to be very interesting especially when you to start to add in the emerging brands. There is a saying that we New Yorkers have, “If you can make it here, you can make it anywhere.” Hopefully, the capacity is large enough to satisfy all that want to eat a part of the Big Apple.
If you want to check out the pace of the New York market, plan your visit to coincide with the International Hotel/Motel & Restaurant Show, November 13-16. You’ll find the latest products and services to help you earn your share of the market gains to be won in 2011.
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