By Bob Lannan
I was privileged to attend this year’s ALIS Law conference in Los Angeles, which ended yesterday. The ALIS development conference (“Big ALIS”) is continuing, but I decided to sit that one out this year.
ALIS Law has a policy that its panel discussions are “off the record.” Attendees are asked not to record the sessions or even take notes. This provides speakers greater comfort to speak candidly, without fear that their statements will be quoted, in the media or otherwise. At Georgetown University Law Center’s annual Hotel & Lodging Legal Summit, which I have co-chaired for a number of years, Georgetown implements the opposite policy. With the exception of the General Counsels’ Panels, all panels are recorded for later viewing, and members of the media are invited to attend the conference without charge. This isn’t surprising for an institution located in the heart of the Nation’s Capital. There are advantages and disadvantages to each approach.
Out of respect for the policy at ALIS Law, I will not quote any of the panelists. I don’t think it will breach that policy for me to identify a few subjects that were at the top of people’s minds, both during the panel discussions and in informal conversations at networking events.
- Insurance. I was not expecting insurance to receive as much attention as it did. It was clear from discussions that insurance has become more expensive for hotel owners. Premiums and deductibles are higher, and underwriting is stricter. Some of this is driven by recent natural disasters, including the wildfires that ravaged Los Angeles County earlier this month, which have reverberated throughout the insurance industry in part because of reinsurance claims by carriers that insure properties there.
- Immigration. With the second Trump administration having begun and deportations ramping up, it surprised no one that immigration was a topic of concern. However, no one knew exactly what to expect because it remains to be seen how extensive mass deportations will be. Everyone is watching this closely, and I expect that we will have more to discuss at the Georgetown conference this fall.
- The Development Market. The market for hotel development has cooled, and everyone is aware of that. High interest rates (compared to recent years) have made developments more difficult to finance. Meanwhile, there is still a gap between the amounts sellers are demanding and those buyers are willing to pay for hotel properties. Lenders are extending the maturity dates of loans, which has made distressed sales less numerous than many had expected.
- Higher Operating Costs. While higher interest rates have driven up hotel owners’ debt service costs, the inflation of 2021-23 has driven up hotel operating costs, notably including the costs of labor. This has reverberated in collective bargaining negotiations (which were contentious nationwide last year), budget negotiations between owners and operators and other aspects of the hotel business.
- It’s a small world (and we like it). The hospitality industry is large and employs many people. However, the community of attorneys and other professionals who support this industry is relatively small. For veterans of multiple ALIS Law conferences, this is evident before anyone begins to speak, because we see many of the same people who have attended previous conferences and similar events. More than one speaker noted that we work in a noticeably small community, in which it’s helpful to foster positive relationships and avoid burning bridges. One reason the professional community in this industry is small is that members of this community like the industry and the services it provides. We stick it out through challenging periods driven by the industry’s sensitivity to changes in the economy.
I enjoyed catching up with professional colleagues, making some new acquaintances and gaining insights on the latest developments in the industry at this year’s ALIS. Hopefully by next year’s conference the economic backdrop will have improved.