VOL. 126 | NO. 167 | Friday, August 26, 2011
Summit Touts Return of Demand
“Demand is back” was the theme at the ninth annual Southern Lodging Summit held Downtown this week at The Peabody hotel and the Memphis Cook Convention Center.
Hoteliers and industry execs gathered for the 2011 Summit, which was organized by the Metropolitan Memphis Hotel & Lodging Association and hotel consulting firm Pinkowski & Co.
“This year’s Southern Lodging Summit went extremely well,” said MMHLA executive director Peggy Callahan. “We were pleased with this year’s attendance. Our great guest speakers were really informative, and they gave us a heads-up for what to expect for the future.”
Optimism in the industry has been sparked by increased room demand, which has led to higher occupancies, average daily rates (ADR) and revenue per available room (RevPAR). Demand had waned substantially during the Great Recession years of 2008 and 2009.
The bulk of the summit’s presentations took place on Wednesday in Ballroom A at the Cook Convention Center and featured some of the industry’s biggest players.
“There isn’t really any (commercial mortgage-backed security) market out there to finance new properties, so very little new supply growth coupled with extremely strong demand rebound should result in strong pricing power,” said Jan Freitag, vice president of global development for Smith Travel Research.
Chuck Pinkowski of Pinkowski & Co. talked to the summit’s 173 attendees about several major issues that have impacted the Mid-South area’s 246 hotels so far in 2011, with more on tap in the near future.
“The flooding of the Mississippi River earlier in the year created a PR challenge due to inaccurate national reporting about the extent of the flooding,” said Pinkowski, who anticipates a positive impact on local hotels when Southwest Airlines enters the market and creates new travel activity at Memphis International Airport.
The rebranding of the former Holiday Inn Select property at Poplar and I-240 is expected to shake things up in East Memphis when that property reopens in about a year as a Marriott. Noble Investment Group acquired the property for $7.5 million in mid-July and is in the process of converting it.
“The hotel market in East Memphis will be a hot zone in the near future due to increased competition,” Pinkowski said.
For the Memphis hotel market as a whole, numbers in most major categories are up slightly for 2011. Demand has risen 3.4 percent and occupancy is up 2.9 percent for the year. RevPAR jumped 2.8 percent this year. For the 16 major Downtown hotels, numbers have mostly held steady in 2011, with demand, occupancy and RevPAR up roughly 1 percent.
Slow, steady improvement is expected to continue for the Memphis market through 2012.
Marlene Colucci, executive vice president for public policy with the American Hotel & Lodging Association, talked to the group about big governmental issues within the hotel industry, including new ADA regulations and municipalities suing online hotel booking sites over unpaid room taxes.
The morning session also featured a presidents’ panel moderated by InterContinental Hotels Group vice president of performance strategy and planning Isaac Collazo and including panelists Jerry Cataldo of Hostmark Hospitality, Chad Crandell of Capital Hotel Management, Warren Fields of Pyramid Advisors and David Pepper of Choice Hotels International.
The expert panel is optimistic for 2012 and cautiously optimistic for 2013, but they conceded that next year will probably be “flatter than we’d like it to be.”
The lack of new development across the country was also a key point of interest. Memphis is similar to many other major markets where there has been little to no new hotel construction for the past couple of years. Memphis RevPAR growth of only 1 percent has not been enough to sway lenders to loosen their purse strings for new, ground-up construction.
“Interestingly, new development doesn’t have much to do with supply and demand. It’s all about the availability of capital,” said Cataldo.
“Once RevPAR comes back again and we can start believing in some of the pro-formas, that’s when the lenders are going to start coming back,” said Pepper.
Another trend in the first half of this year was increased real estate investment trust activity buying up urban properties in major markets like New York and Chicago in order to drive up valuations. So far that trend has not trickled down to second-tier markets like Memphis.
Peter Yesawich, chairman & CEO of YPartnership from Orlando, Fla., was the summit’s keynote speaker, and he spoke during Wednesday’s lunch about traveling trends and the forecast for the next few years.
To wrap up the two-day summit, Jeff Higley, editor of HotelNewsNow/STR Global, led an interactive afternoon panel on the emergence and importance of social media in the industry.
Elected officials in attendance included Memphis Mayor A C Wharton Jr., who gave an energetic introductory speech on Wednesday, and City Councilman Bill Boyd.