SAN DIEGO—Grappling with a recession that has created a more challenging marketplace than the industry has seen in 30 years, the majority of hospitality executives are decidedly bearish for 2009, according to the DLA Piper 2009 Hospitality Outlook Survey revealed here at the Americas Lodging Investment Seminar conference. The survey, measuring the attitudes and perspectives of top executives within the hospitality industry, reveals that nine out of 10 respondents describe themselves as bearish. Expected to continue its recent decline, the majority (62 percent) of respondents also predicts that the full-year 2009 U.S. hotel occupancy rate will drop to a new record low, eclipsing the previous record low set in 2002.
In terms of a recovery, 92 percent of respondents do not foresee an industry-wide recovery until 2010 or 2011 but the majority of respondents (65 percent) have begun to see an upside and think current market conditions have created “good” buying opportunities.
“Despite the struggles of the U.S. economy and deteriorating fundamentals in the hospitality industry, it is surprising that more than half of our respondents believe now is a good time to buy—especially when most don’t see a rebound on the immediate horizon,” said Sandra Kellman, global co-chair of DLA Piper’s Hospitality and Leisure practice.
“There are opportunities for the well-capitalized, and it’s interesting to note that the current recession seems to have reinforced an interest in ‘green’ hotels which can reduce operational expenses over the long-term,” added Kellman.
According to DLA Piper, the survey yielded a number of other interesting conclusions, including:
• Seventy-five percent of respondents believe that investment activity in “green” hotels is a long-term trend.
• Nine out of 10 respondents do not expect U.S. luxury hotels to rebound in the coming year.
• The midscale and upscale sectors of the hospitality industry rank as the two most attractive investment opportunities in the next 12 months.
• Nine out of 10 respondents think that hotel asset values will decline during the next 12 months.
• Forty-three percent believe that the current recession has had a greater impact on revenue per available room (RevPAR) than any other previous recession during the past 30 years.
• Despite a variety of concerns, respondents do not see a widespread risk of bankruptcy for hotel chains. The largest percentage of respondents (36 percent) expects that only one to two hotel chains will file for bankruptcy in the next 12 months.
For a copy of the full results of the survey, go to DLA Piper.
