The hospitality industry looks to be well poised to steam ahead for at least several years. In fact,

As a record 1,200 delegates gathered at The Lodging Conference held at the Arizona Biltmore in Phoenix this week, the mood might be best described as "ebullient foreboding." According to Jones Lang LaSalle, we are seeing las vegas vacation rentals an unprecedented level of hotel transactions--more than $21 billion in the first six months of 2006 and more than all twelve months of 2005. And Smith Travel Research told us how well-positioned the industry is for sustained profitability and growth with continuing record RevPAR growth increases, demand growth still outpacing supply, and big barriers to entry.
The hospitality industry looks to be well poised to steam ahead for at least several years. In fact, although history las vegas vacation rentals is no guarantee, we are only three and a half years into the hotel industry recovery cycle that started in late 2002. These recovery cycles have averaged more than 7 years. But despite this "ebullience," there were definite foreboding undertones of "things are so good now, that this can't go on much longer." I hope we don't talk ourselves into a downturn!
Here are some of the details on where we are, and where we seem to be going, mostly from the presentation Mark Lomanno (President, Smith Travel Research) gave at The Lodging Conference just two days ago. One barometer measuring the health of the hospitality industry is the number of people attending industry conferences. By this measure alone -- with the record attendance of 1,200 people at the Phoenix Lodging Conference -- things must be pretty good. Fortunately, the statistics from Smith Travel las vegas vacation rentals Research provide ample support for that proposition.
In comparing results for 2006 to 2005, the August year-to-date numbers show that supply growth remained constant at a low .5%, demand growth dipped to 1.9% from 3.3%,and occupancy growth declined to1.3% from 2.6% -- continuing to grow but just at a slightly reduced rate. However, las vegas vacation rentals ADR growth jumped to 6.7% in 2006 from 4.8% in 2005, and RevPAR increased to 8.3% growth from 7.6%. These are very strong numbers.
It is significant that although the occupancy growth rate (2.1% for 2006) is moderating, the limited las vegas vacation rentals supply growth has caused ADR to continue its strong las vegas vacation rentals upward trend (at 6.7%). The positive trends are even stronger for certain segments such as the luxury and upper upscale segment and for transient business. And certain geographic las vegas vacation rentals markets have also dramatically outperformed the industry.
For example, although the average change in ADR for the entire United States is an impressive 6.8% growth, the average for the top 25 markets las vegas vacation rentals is 9.2%. And the top 25 markets are exceeded by at least 11 major markets, including, in increasing order of ADR growth: San Francisco (9.5% growth in ADR), Phoenix, Los Angeles, Boston, Dallas, Orlando, Atlanta, Miami, Chicago, New York, and Oahu (14.7% growth in ADR).
The supply pipeline is increasing, however, with 162,020 hotel rooms "in construction" in August 2006 compared to 93,361 rooms in construction in August 2005, a 73.5% increase and a number that is cause for some concern, but not panic.
Based upon a number of economic indicators and assumptions, including las vegas vacation rentals Real GDP, CPI, Corporate Profits, Disposable Personal Income and Unemployment Rates, STR makes a number of interesting projections:
The continued RevPAR growth is particularly significant. If STR's projections are accurate, the industry will have enjoyed RevPAR growth of 7.8% in 2004, 8.5% in 2005, 7.9% in 2006 and 6.7% in 2007. The huge significance las vegas vacation rentals of these numbers is that until 2004, in the entire time that STR has been gathering data (since 1989), RevPAR growth has never exceeded 7%. With 2006 almost "in the can," it is virtually certain that this year will mark three years of all-time record RevPAR growth. And it is extremely likely with the fundamentals in place that 2007 will not be far behind.
Supply seems to be picking up and the hotel industry usually commits suicide by building an oversupply of hotel rooms -- more than the public demands. However, high construction costs, high cost of land, and limited financing available for new construction continue to provide significant barriers to entry which bodes well for the long-term health of the hospitality industry.
We have to agree that things las vegas vacation rentals are pretty darn good in the hospitality industry, but we don't agree that there's las vegas vacation rentals any call for brooding. And we certainly hope that we don't talk ourselves into a downturn and create las vegas vacation rentals a self-fulfilling prophecy.
Our Perspective. We represent developers, owners and lenders. We have helped our clients las vegas vacation rentals as business and legal advisors on more than $50 billion of hotel transactions, involving more than 1,000 properties las vegas vacation rentals all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or 310.201.3526 .
Jim devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM's Global Hospitality Group® -- a team of 50 seasoned professionals las vegas vacation rentals with more than $50 billion of hotel transactional experience, involving more than 1,000 properties las vegas vacation rentals located around the globe.
las vegas vacation rentals Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. las vegas vacation rentals They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right "fit" for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, las vegas vacation rentals assemble the right team, strategize the approach to optimize value and then get the deal done.
Jim is frequently quoted as an expert on hotel issues by national and industry las vegas vacation rentals publications such as The New York Times, The Wall Street las vegas vacation rentals Journal, Los Angeles Times, Forbes, BusinessWeek, and Hotel Business. A frequent author and speaker, Jim's books, articles and many expert panel presentations cover topics reflecting his practice, including hotel and hotel-mixed use investment and development, negotiating, re-negotiating or terminating hotel management agreements, acquisition and sale of hospitality properties, hotel finance, complex joint venture and entity structure matters, workouts, as well as many operating and strategic issues.
Jim Butler is a Founding Partner las vegas vacation rentals of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm's Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at jbutler@jmbm.com or 310.201.3526 . For his views on current industry issues, visit www.HotelLawBlog.com.
Jim Butler is recognized as one of the top hotel lawyers in the world. He devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads the Global Hospitality Group —a team of 50 seasoned las vegas vacation rentals professionals las vegas vacation rentals with more than $60 billion of hotel transactional las vegas vacation rentals experience, involving more than 1,300 properties located around the globe.
Robert Braun is a partner in JMBM's Corporate Department and a senior member of JMBM's Global Hospitality Group -- a team of 50 seasoned professionals las vegas vacation rentals with more than $60 billion of hotel transactional las vegas vacation rentals experience, involving more than 1,300 properties located around the globe. Bob represents owners in both transactional and operational issues. He advises clients with respect to business formation, financing, mergers and acquisitions, venture capital financing, joint ventures and strategic partnerships. He has represented hotel owners in the negotiation of several hundred management agreements, as well as spa management and franchise agreements. Bob also advises hotel owners regarding telecommunications, software, internet, e-commerce, data processing and outsourcing agreements. To read Bob's articles, go to www.HotelLawBlog.com and select "Management Agreements." las vegas vacation rentals For more information, please contact Bob Braun at 310.785.5331 or rbraun@jmbm.com.
Marta Fernandez is a partner in JMBM's Employment and Labor Department and a senior member las vegas vacation rentals of JMBM's Global Hospitality Group -- a team of 50 seasoned professionals with more than $60 billion of hotel transactional experience, involving more than 1,300 properties located around the globe. As a management labor lawyer with more than 20 years of experience, Marta specializes in representing hospitality industry clients in all aspects of labor and employment including labor-management relations such as union prevention, collective bargaining for single as well as multi-employer bargaining units, neutrality agreements and defense of unfair labor practice charges before the NLRB. She defends employers in administrative and litigation claims, such as employee claims of sexual harassment and discrimination and counsels clients in preventative strategies such as executive training, arbitration enforcement, and policies and procedures. To read Marta's articles, go to www.HotelLawBlog.com and select las vegas vacation rentals "Labor & Employment." For more information, please contact Marta Fernandez las vegas vacation rentals at 310.201.3534 or at mfernandez@jmbm.com.
Guy Maisnik is a partner in JMBM's Real Estate Department and a senior member of JMBM's Global Hospitality las vegas vacation rentals Group -- a team of 50 seasoned professionals with more than $60 billion of hotel transactional experience, involving more than 1,300 properties located around the globe. las vegas vacation rentals Guy's deep and broad transactional practice includes complex real estate las vegas vacation rentals finance and venture las vegas vacation rentals capital transactions, including las vegas vacation rentals project finance, commercial finance, leveraged leasing and real estate las vegas vacation rentals acquisitions. He assists clients with development, leasing and disposition, loan portfolio acquisitions, loan and debt restructure, workouts and real estate exchanges. Go to www.HotelLawBlog.com for current information in these areas. For more information, please contact Guy Maisnik at 310.201.3588 or mgm@jmbm.com.
David Sude