Does the hospitality sector see a silver lining on the horizon? Although many are predicting that the economic slump will continue to plague struggling hotels, casinos, and resorts, there may be some good news for Building Teams in the offing.
“We do expect hotel transaction volume to increase over 2009 levels and new transactions could likely lead to new renovation projects,” reports David A. Black, managing director of hotel project and development services, Jones Lang LaSalle (www.joneslanglasalle.com), Chicago.
And while a recent survey by the National Business Travel Association revealed that 71% of U.S. corporate travel buyers plan to decrease nonessential travel this year, a recent United Nations World Tourism Organization report stated that leisure travel forecasts international arrivals to increase by a few percentage points and is expected to continue to outpace business travel. These changes portend new needs for hospitality buildings designed originally for the booming business market that may now need a more consumer-oriented profile.
Consequently, hoteliers are busy reshuffling the deck to fill the occupancies left by business travelers who now prefer e-mail and low-cost teleconferencing. Although financing is tight, Black's 27 years of hospitality and real estate development experience tell him that now is a good time to renovate. “There will be less new supply of hotels coming on line in the next several years, so if owners can afford to do it, they will be emerging with a newly renovated property when others will be just starting their renovations,” putting them in a better market-leading position,” he says.
Furthermore, says the JLL strategist, costs for construction, materials, and professional services are down approximately 20% from 2008 levels. Renovating now means less “displacement of business.”