The dozens of top hospitality experts who spoke at Tuesday's Bisnow Lodging Investment Summit East event highlighted a wide range of trends happening in the market, from Chinese tourism to the explosion of new brands to the impact that surging supply is having on key hotel metrics.
Woodmont Lodging principal Michael Blank said a glut of capital in the market has made it harder to get acquisition deals done.
"We see a very competitive environment out there," Blank said. "Pricing does seem strong. There's a lot of money pursuing these assets. We've tried to stay patient and find the right spots to jump in."
The event was held at the Hilton McLean Tysons. Hilton President of Global Development Ian Carter gave a market presentation and emphasized the boost U.S. markets are receiving from Chinese tourism. Not only is the number of Chinese visitors increasing, but he said they are spending a significant amount of money.
Carter said a California tourism study he participated in found that Chinese guests spend six times as much as European travelers on hotels, restaurants, entertainment and goods.
"The impact of these Chinese travelers is quite massive," Carter said. "It's not simply that they travel. They're also spending."
Trump Hotels Executive Vice President Kathleen Flores said the company tries to implement environmentally friendly practices, but focuses on the ones that save money.
"We approach sustainability in terms of how it impacts the bottom line," Flores said. "So we’re not going after a particular certification. But there are a lot of innovations now in green sustainability that drive dollars back to your owners. So that's how we approach it."
Best Western East Coast Managing Director Fran Taloricco said the explosion of new brands doesn't necessarily indicate a bubble is forming. He said there is a misperception that every new brand needs to have hundreds of locations. Ultimately, he said it is important to listen to developers when determining the viability of a brand.
"Developers will tell us if something is too expensive or a waste of space," Taloricco said. "The market will always tell you if something is wrong. If you have a product that is too expensive, developers won't build it, and word gets out quickly. In order to succeed, you have to listen to developers."
D.C.'s key hospitality metrics decreased slightly through the first half of 2018, in part due to the comparison with the busy Inauguration weekend the prior year. But Foxhall Partners Managing Partner Matt Wexler attributes the sluggish performance to the surge of new hotel supply, combined with a slow convention calendar and a drop in foreign travelers, which he says is a result of President Donald Trump's rhetoric.
"2018 has been challenging with new supply, and it's been a little bit of a down cycle with big citywide convention bookings," Wexler said. "It's been a challenging year for everybody in all sectors."
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Brillembourg Group founder and CEO David Brillembourg discussed the potential disruption blockchain could have on the hospitality market. He said he sees big opportunities on the financing side, and he expects companies to come out with blockchain-based loyalty programs.
"Think about Airbnb 10 years ago, they didn't have any rooms," Brillembourg said. "What are they now? That's what blockchain is going to be."
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Peebles Corp. CEO Don Peebles said he sees hospitality as one of the safest commercial real estate sectors, given the unpredictable transformations happening in the retail and office markets.
"I'm heavily invested in hotels and I'm getting ready to build a lot more. Long-term, it's a great asset," Peebles said. "Two businesses that will always be around are accommodating and housing human beings. Business travelers can't sleep on the sidewalk. Hotels have higher barriers to entry because they're harder to finance."
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The influx of hotel supply in markets across the country has made it difficult for owners to raise rates, creating a trend of flat to modest average daily rate growth that experts think will continue.
"I think we're going to have another year of modest growth, but we are definitely slowing down," Wells Fargo Hospitality Finance Group leader Jennifer Dakin said. "Everyone's really pushing hard to get ADR, but with increased competition, it's just going to hamper the ability to push it too much more in the future."
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