20/20 – Aiming for a Perfect Vision of the Hotel Industry

By Demian Hodari - Associate Professor of Strategic Management at the Ecole Hôtelière Lausanne (EHL)

11 February 2020

Welcome to the first in a series of panel discussions about the world of hotel real estate investment, development and management. With the help of over 20 dedicated owners/investors, asset managers, developers, general managers and consultants, we will explore a host of questions about the hotel industry in 2020.

I recently provided my panel with 10 events and asked them to estimate the probability (between 0 and 100 percent) of each one occurring in 2020. These ranged in topic and included such areas as industry performance, consolidation, social responsibility, and so on, and also mentioned specific companies (Marriott, Ace, etc.), individuals (Greta Thunberg, Donald Trump, etc.) and sources of data (STR, my own googling skills, etc.).

(If you’d like to play along, please dust off your crystal ball and click here. A winner from the general public (you?) will be announced in early 2021 – to be eligible you must participate by 16 February 2020).

While we will need to wait until the start of 2021 to crown the champion forecaster, each month or so I will tease the results for a few questions and provide you with my panels’ reasoning and/or analyses.

For this month we look at: Industry Performance in 2020 (Questions 1 and 3) because what better way to gauge our panel members’ 2020 vision than by pinning them down on two indicators of the overall health of the industry: hotel transactions and hotel RevPAR.

20/20– Aiming for a Perfect Vision of the Hotel Industry
20/20– Aiming for a Perfect Vision of the Hotel Industry

The panel is bullish (median 67.5%) on the prospect of the 2020 transaction market beating 2019's tally of $62 billion. Interestingly, nearly 1/3 of the panel is 100% confident of this! On the other hand, the panel’s outlook on U.S. RevPar for 2020 (median at 50%) is gloomier with nearly 2/3 of the panel believing it less than 50% likely to exceed STR's forecast of 0.5% growth. Let’s see what the panel has to say about their collective wisdom.

Questions posed to the panel about the data: Why are you so bullish on hotel transactions but more conservative on RevPAR? If hotel operating performance stagnates, why will there be such continued interest in acquiring hotel properties? Should growth in hotel performance (i.e., RevPAR) not be a significant force driving hotel transactions and values? For the naysayers on transaction growth, why is this the case? Click here for the results!

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Demian Hodari

Demian Hodari is an Associate Professor of Strategic Management at the Ecole hôtelière de Lausanne. His research focuses on the evolving roles of hotel owners, asset managers and general managers. He regularly presents his research at academic conferences, provides executive education and is a frequent moderator and/or chairperson for industry events.

Sherif Mamdouh

External Communications Manager