NEW YORK CITY-An increase in the amount of business travel is supporting a slow recovery of the nation’s lodging industry. And the level of transactional activity can infer that a recovery is in process, according to the recently released update of Ernst & Young’s 2004 National Lodging Report.

Michael Fishbin, national director for Ernst & Young’s hospitality advisory services, tells GlobeSt.com that some interesting trends include moves in such cities as Boston and New York City toward investing in condominium hotel concepts. He says it’s a different way of accumulating development capital.

The level of transactional activity in the sector can indicate confidence, says Fishbin. “and that we’re on a recovery.” He notes there is increasing activity on both coasts and particularly in the luxury market. One area that is performing well is San Diego. Fishbin says San Diego has a strong appeal as a both a convention site and a drive-to leisure destination.

Fishbin also says E&Y is spending more time looking at development projects. “It’s not full force on development, but there’s an active pipeline.” That’s also corroborated by Lodging Econometric’s latest forecast on the construction pipeline.

The total new construction pipeline increased by a modest 48 projects having 9,090 rooms in the second quarter. “It’s a sign that the Pipeline’s bottoming formation has ended, and we have now entered into a new up-trending construction cycle that should last for three or four years,” says LE president Patrick Ford, adding that the cycle is in its infancy.

Mold is an increasing concern for the hotel owners, Dan Lentz, a partner and co-director of E&Y’s insurance and claims services practice, tells GlobeSt.com. “It’s extraordinarily difficult to put a dollar value because nobody wants anybody to know they have a mold problem.” He labels the issue “widespread” and notes it has more to do with construction and maintenance than with the outside environment. According to E&Y’s report, the cost of remediating a serious mold problem can exceed 50% of a hotel’s initial construction cost, not including claims. Lentz says many are using the blanket label of reconstruction to avoid the stigma associated with the term “mold.”

The booming cruise industry, which is anticipating 10 new ships and more than one million new passengers this year alone, is also taking a bite out of the lodging market; however, plans are in the works to turn the normally “contentious” relationship around through cross-marketing efforts to try for guest loyalty in the long term.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Dig Deeper

 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.