Do headwinds and tailwinds cancel each other out? Or do they meet in the middle of the metaphorical Great Plains of investment and collide to form an epic twister?
Whatever the weather analogy here, something is brewing in the hotel industry. My colleague Sean McCracken put it very well in a recent blog post when he stated that "everyone is trying to make out the current situation the hotel industry faces as something more complicated than it is."
He boiled down the "will we or won't we?" sentiments around hotel transactions, interest rates and inflation as elements that are at the mercy of higher powers.
"Those things will happen when economic policy allows for it," he wrote.
We're approaching the annual NYU International Hospitality Industry Investment Conference, and those economic policies and practices will be the center of conversation. Will the Fed lower interest rates? Are consumers still spending on travel? What does all this mean for hotel performance forecasting?
For every member of Team Headwinds, there will be a member of Team Tailwinds. Maybe both are right? Maybe we're just talking in circles to fill airtime. We essentially have to have these endless, boring, circular conversations at hotel investment conferences, because how would we fill the general sessions otherwise? And it's out of those sessions that the industry talks itself into looming disaster.
That's the power of group think. And, dare I say, it's also the power of suggestion, when people in positions of power tell you what they think.
So I keep coming back to McCracken's phrase: "Those things will happen when economic policy allows for it."
That's a broad phrase, but it's applicable on all levels. Hotel deals over $500 million are happening: Henderson Park bought the Arizona Biltmore last week for $705 million. Host picked up the 1 Nashville and Embassy Suites for $530 million. Those deals fit each buyer's economic policy in one way or another or they wouldn't have opened their wallets.
People have economic policies too. Sure, revenge leisure travel is slowing overall, but did you read this New York Times article about
the "ever-more-lavish" experiences luxury travelers are clamoring for?
It comes down to what people and companies do, not so much what they say. From my perspective, there's action happening, so just call me Team Tailwinds.
What do you think? Email me, or find me on Twitter or LinkedIn.
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