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Overheard at the ALIS Hotel Conference in Los Angeles

Again this year the leaders and experts of hotel investment and development descended on Los Angeles’ L.A. Live for the annual Americas Lodging Investment Summit, or ALIS. The mood was rather upbeat after an improving 2012 for the sector and optimism for 2013.

Hot topics across the conference included:

  • Talks about the sale of New York’s 509-room Essex House on Central Park South to Strategic Hotels & Resorts, its rebranding from Jumeirah to JW Marriott, and the fate of the building’s branded residential portion.
  • The upcoming Miami debut of the long-awaited ‘1’ hotel brand from Barry Sternlicht’s Starwood Capital, taking over the hotel-condo project last known as the Perry South Beach and previously the Gansevoort South Beach.
  • Hotel development financing is still limited in many areas with investors having options to buy hotels below the cost to build new. The exception is – no surprise to us here at – large mixed-use projects with residential components which lower the owner’s basis for the hotel, pre-sales that help to encourage financing, and the operational benefits of having residents spend more at the hotel’s amenities and defray some of the operating costs.
  • The lack of development in the US over the past several years and limitations on new supply in Europe has the researchers forecasting higher RevPAR (revenue per available room), although flat elsewhere as demand catches up with the recent building boom in the Middle East and Asia-Pacific.
  • US hotel demand hit an all-time occupancy record of 91.7 million room nights sold, over 15% over last year, with Europe and Asia also growing by 9.5% and 10.2% respectively.
  • Room rates are expected to reach pre-crisis levels by summer 2013, resulting in a 5 ½ year period to recoup the lost ground since the recession.
  • On the investment front, 2012 saw a four-year high of US hotel transactions. Five markets account for 33% of all investment deals – San Francisco, Chicago, Washington, Miami and New York – which is considered the most liquid market in the world.
  • The mismatch between increasingly sophisticated consumers and current loyalty programs that struggle to keep up with the trend towards customized instead of generic travel.