Letter: Factor in changes to volatile hotel industry

Posted
Changing hotel industry must be factored in

To the editor:

Regarding your Jan. 1 article, "Lenox Selectmen push for study on hotel needs in town," we should all be concerned. The hotel industry is faced with further consolidation, with changing tastes, and industry disrupters like VRBO and Airbnb. Overbuilding is a real possibility.

The Economist Magazine report of Nov. 21, 2015 forewarns: "Hotels face relentless change online. Airbnb, a room-sharing site, now offers more rooms than even the combined Marriott and Starwood Growing supply may make it harder still. Already, the growth of American occupancy rates and RevPAR [room rates] have begun to slow."

The Berkshires have been characterized as "tourist-based." However, that designation is wrong. Expenditures of second home owners, business travelers and regional visitors are not the same thing as one-time tourism.

Several towns may wish to cooperate on a lodging industry study to gain a perspective of trends in the "larger travel and tourism business" and then develop individual reports to focus on town-specific economies. A study should be done by those without financial interests, since interpretation of data lies "in the eye of the beholder." For example, a report by a firm that has an association with a developer serves the needs of its client or special interest groups. To be truly independent, a study needs to be commissioned by the town or group of towns to address the economic impact on the entire community.

Useful reports on the hotel industry by securities analysts need to be put into context. A UBS report noted, since "Marriott owns or leases just 2 percent of hotel rooms it operates," the risk of real estate ownership is deflected onto its franchisees. Thus, towns that provide special dispensation to encourage franchised hoteliers could suffer disproportionately in a downturn or through over-supply. The same December 2015 report notes a potential concern includes new capacity additions: " new additions are at the higher end of the past five years. We believe this issue could become more acute, particularly in the back half of 2016 and into 2017."

Sharon Gregory, Great Barrington


TALK TO US

If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.

Powered by Creative Circle Media Solutions