DLA Piper Survey Reveals Bearish Marketplace
JANUARY 27, 2009 - Grappling with a recession that has created a more challenging marketplace than the industry has seen in 30 years, the majority of hospitality executives are decidedly bearish for 2009, according to the DLA Piper 2009 Hospitality Outlook Survey revealed today at the Americas Lodging Investment Seminar conference.
The survey, measuring the attitudes and perspectives of top executives within the hospitality industry, reveals that nine out of 10 respondents describe themselves as bearish. Expected to continue its recent decline, the majority (62 percent) of respondents also predicts that the full-year 2009 US hotel occupancy rate will drop to a new record low, eclipsing the previous record low set in 2002.
In terms of a recovery, 92% of respondents do not foresee an industry-wide recovery until 2010 or 2011 but the majority of respondents (65%) have begun to see an upside and think current market conditions have created "good" buying opportunities.
"Despite the struggles of the US economy and deteriorating fundamentals in the hospitality industry, it is surprising that more than half of our respondents believe now is a good time to buy - especially when most don't see a rebound on the immediate horizon," said Sandra Kellman, global co-chair of DLA Piper's Hospitality and Leisure practice.
"There are opportunities for the well-capitalized, and it's interesting to note that the current recession seems to have reinforced an interest in 'green' hotels which can reduce operational expenses over the long-term," added Kellman.
According to DLA Piper, the survey yielded a number of other interesting conclusions, including:
o 75% of respondents believe that investment activity in "green" hotels is a long-term trend.
o 9 out of 10 respondents do not expect US luxury hotels to rebound in the coming year.
o The midscale and upscale sectors of the hospitality industry rank as the two most attractive investment opportunities in the next 12 months.
o 9 out of 10 respondents think that hotel asset values will decline during the next 12 months.
o 43% believe that the current recession has had a greater impact on revenue per available room (RevPAR) than any other previous recession during the past 30 years.
o Despite a variety of concerns, respondents do not see a widespread risk of bankruptcy for hotel chains. The largest percentage of respondents (36 percent) expects that only 1-2 hotels chains will file for bankruptcy in the next 12 months.
For a copy of the full results of the survey, please contact Brian Kiefer at (312) 252-4113 or download the survey now.
About DLA Piper (www.dlapiper.com)
DLA Piper has 3,700 lawyers in 28 countries and 67 offices throughout the U.S., U.K., Continental Europe, Middle East and Asia. In certain jurisdictions, this information may be considered attorney advertising.
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