March 1997

Offering insights to more than 165 hotel executives as they chart the course of their industry after the year 2000, HVS International President Steve Rushmore was the keynote speaker at what has become the unofficial kickoff to the annual UCLA Hotel Investment Conference. On January 22, 1997, Steve led the JMBM pre-UCLA Executive Briefing, “The Hotel Industry in the Next Millennium: Where have we come from? Where are we going?” JMBM Lodging and Leisure Group chairman Jim Butler welcomed the group and served as moderators for the program.

Steve’s recommendations on this changing industry included: 

• Keep buying full-service hotels 
• For passive hotel owners, you should have sold budget hotels last year, plan to sell mid-rate hotels this year, upscale hotels next year, and luxury hotels in two years 
• Start building full-service hotels in markets with barriers to entry
• Keep your product up to date

• Occupancies are starting to peak in many markets 
• Room rates will continue to exceed the inflation rate 
• Overbuilding is occurring in some markets, especially economy properties
• Extended-stay is a thin market, can make great all-suite properties, and budget, extended-stay properties will complete effectively for transient business

Reviewing statistics for the past six years, Steve discussed how 1996 was a peak year in hotel transactions since 1990, with the number of rooms and the average price per room ($108,105) approaching or exceeding levels in that year.

Good “buy” markets include Philadelphia, Riverside, Anaheim, Orlando, Tampa, Houston and Los Angeles while Boston, New York and San Francisco are hot “build” markets and San Antonio and New Orleans are good “sell” venues.

Steve also projected that there will be more technology in all hotels (internet connections, fax modems and computer ports), JV’s between hotels and restaurants (like KIMCO), and food courts.

He also thinks we need: Another upscale 4-5 star brand to join Four Seasons, Ritz-Carlton and Regent. An operator specializing in convention hotels (Fairmont?) A bed and breakfast marketing organization

Rushmore Junk Food Hit List: 

• Tommy’ in LA 
• The Varsity in Atlanta 
• Sonny Bryans in Dallas 
• The White House in Atlantic City 
• Peppy’s Pizza in New Haven 
• Central Grocery in New Orleans