hospitalitystyle.com

(January 2009) posted on Tue Jan 27, 2009 EST

It’s not all doom-and-gloom for hotel designers and operators—international markets and mid-tier/budget chains offer opportunities in today’s turbulent economy.

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By Matthew Hall

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Bill Marriott's spirits got a boost in November, when he visited the construction site of L.A. Live, a mixed-use development that will house two of his company's luxury brands-JW Marriott and Ritz-Carlton-when it opens in 2010.

"L.A. Live is stunning, and I'm betting it will be great success," the iconic hotel owner/operator noted in his blog. "Given all the gloomy financial and economic news around these days, it's important to make the point that when we come out of these tough times, our company will be ready. That's not going to happen overnight, but it's going to happen."

Marriott has plenty of company when it comes to holding an upbeat outlook for the hotel industry's longer-term prospects. For example, in its recent three-year forecast for the sector, Lodging Econometrics concludes that the supply of new guest rooms is still going to lag demand in 2009, which should translate into a faster recovery for the industry as it heads into 2010.

All fine and good. But what can hotel architects and designers do to keep their phones ringing (and e-mail in-boxes abuzz) with work during the coming year, which promises to be challenging not only for launching new projects, but also for keeping existing ones alive? And how can existing hotel properties themselves best weather the storm? To answer these questions, Hospitality Style contacted hotel investors, owners, operators and designers to find out where the design work will be as 2009 unfolds. (See the sidebar below for insights on the latest trends in hospitality layouts, materials and colors.)

PURSE STRINGS STILL TIGHT

First and foremost, expect money for financing hotel construction (and acquisitions) to continue being hard to come by throughout the next 12 months. Starwood Capital Group's executive vice president for hotel development, James Alderman, says projects will need lots of equity-as much as 40 to 50 percent-to secure the debt financing needed to move forward. That's a far cry from the low-equity and no-equity terms available when lenders had capital they needed to redeploy and few targets with returns as high as hotels' 20 percent upside.