‘Cautious optimism’ back at The Lodging Conference

PHOENIX – At this year’s Lodging Conference in Phoenix, the only mention of the pandemic referenced how it was no longer a measuring stick to compare performance or transaction data. In fact, when two groups of CEOs took to the stage on Wednesday morning, the proverbial “cautiously optimistic” phrase was being echoed once again.

There was very little noticeable fretting, but no irrational delirium either. For the most part, the CEOs expect solid performance in 2025 and will focus on being more analytics driven. They want to grow their company cultures, be more collaborative with their owners, adapt to the new normal, evolve with shifting demographics, and they did wonder aloud about when the escalating costs of doing business will stabilize.

During the first session on Wednesday morning led by Women in Hospitality Leadership Alliance Founder Rachel Humphrey, phrases like “moribund dealmaking,” “optimism,” and “data-driven” were heard over and over again.

As rates moderate in 2025, that pendulum will swing back in favor of the brands, who have been very reasonable.

Greg Juceam

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This reporter listened earnestly, waiting for more insightful nuggets worth reporting about. Here are some of those:

• JLL CEO for the Americas Kevin Davis predicted a divided government that gets little done will continue post-November election.
• Peachtree Group Managing Principal and CEO Greg Friedman said deals will remain muted as long as interest rate uncertainty does.
• AAHOA Chairman Miraj Patel said another reason more deals are not transpiring is the hassle factor of buying older assets that need a lot of cash and time to fix.
• Extended Stay America President and CEO Greg Juceam predicted flexibility will drive PIP requirements and expectations in 2025 as owners still struggle with cash flow to complete them. “As rates moderate in 2025, that pendulum will swing back in favor of the brands, who have been very reasonable,” he added.

Big PIPs are also impeding dealmaking and if the Fed eases to a total of 150 basis points by the middle of next year and the Fed funds rate gets to about 4% it will serve as a catalyst for PIP completions and transaction volume, according to Davis. “Mid-November, early-December, expect to see more deals launching, and a lot more by early next year,” Davis opined. “It’s like a snowball at the top of the hill – it gets bigger and faster as it rolls down.”

Peachtree’s Friedman suggested that the Fed’s first 50 bps cut created optimism, but also noted that 10-year treasuries are trending higher, which could signal longer-term concerns.

Friedman added that 2025 will be a more active deal year due to “the wall of debt maturities” and he also predicted bank fatigue on extending loans.

The panel was also asked about what they think is important to developing better leadership skills. Here are a few of their answers:

• Patel: listen more actively and stop trying to solve problems so fast.
• Lisa Lombardo, president, ARK: be selfish with your time and reconsider who’s in your circle and how they fill your most important buckets.
• Juceam: More closely consider if colleagues are just venting or want you to do something about it.
• Friedman: Be thoughtful about how you delegate your time.
• Davis: Be a better delegator of responsibility. Learn to let go and trust the team. Leverage resources to be more effective leader.
• Larry Cuculic, president and CEO of BWH Hotels: Consider work-life balance. You’re a better leader when you take care of yourself.