Has the Industry Reached the Peak?

There is much talk in the hospitality industry about whether or not we are at the peak of the cycle. Hotel News Now found that hotel executives have very differing opinions on where the industry is in the cycle.  

By: HNN Editorial Staff/Hotel News Now
Published: June 2016

There’s no topic hotel industry executives enjoy discussing more than where we are in the current cycle. Find out whether people think the industry has passed the peak, the peak is yet to come or it depends on the market.

We’ve passed the peak

Brian Waldman, SVP, Peachtree Hotel Group
“While we are likely in the latter part of the lodging cycle, there are no immediate or severe storms on the horizon for the majority of the country.

“Fundamentals are forecasted to remain strong for the foreseeable future, providing additional runway for growth as long as there are not any unforeseen global shocks. … In past cycles, new supply has exacerbated the impact of any softening whereas in this cycle, new supply has been concentrated in certain markets like New York, Miami and Houston. We believe this will lead to a more muted end of the cycle for many markets and view the volatility as creating investment opportunity for opportunistic, well-capitalized investors.”

Bashar Wali, principal and president, Provenance Hotels
“It’s a self-fulfilling prophecy—every time we begin to get anxious about the end of the good times approaching, that’s when the party breaks up and the fun is over. The fact that we’re having this conversation is a good indicator that we have hit the peak. Generally speaking, though, I believe that the down period we’re approaching will be a gentler correction than the unprecedented, at least in my lifetime, cliff dive we experienced in ’08 and ’09. We are buckling our seat belts and ready for the ride. 

“Operators on the ground are seeing rates softening. We are watching our colleagues trade rate for occupancy where for the last five years it was really a rate game. It’s not surprising that we are starting to soften from a demand standpoint. We’ve had almost six years of double digit growth in the major markets—anyone who thinks that can continue is naïve.”

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