Forecasts, challenges, opportunities dominate ALIS Day 1

Tempered optimism with a small dose of uncertainty was the focus of discussions on- and off-stage throughout the first day of the American Lodging Investment Summit (ALIS) where more than 2,600 delegates are gathered at the JW Marriott at LA Live in Los Angeles. What that means was largely a matter of degree.

Regarding recession, it was a matter of how deep and how long, seemingly not “whether.” And it was much the same in terms of when interest rates would come down and how low the Federal Reserve really wants inflation. That said, operators were glowing about performance metrics and feel that barring an economic collapse that business travel and group business will continue to rebound.

“The hard part about making any predictions is that the Federal Reserve initially acted on the belief that inflation would be transitory. It wasn’t. They don’t want to be wrong again," said Mat Crosswy, president, Stonehill Strategic Capital."The goal is to get inflation to 2%.  Some in the investment community would like to see 1%, but others don’t think even 2% is achievable.”

With no definitive answers to concerns like these, investment experts expressed mixed views on whether this is the right time to make opportunistic plays and get back in the market before investors fleeing office and retail move into hospitality or whether a continued wait-and-see stance would lead to higher and more sustainable ROI. What they can agree on is that 2023 is likely to look very different in the first and second halves.

Here’s why.

STR increased 2023 RevPAR projections to 3.7% as ADR increase 2.1%. Occupancy will move down slightly to 63.6%, said Amanda Hite, president, STR. She pointed out that Q1 has easier comps and will likely provide the best growth story for 2023 as demand is expected to slow and comps will become tougher to match as the year progresses. ADR growth is expected to slow, as well. The brightest spot on this year’s rate horizon is the upscale sector, with luxury rates expected to flatten out.

The saving grace will continue to be supply growth of only 1.2 to 1.3%.