If the 1,100 people at last week’s Lodging Conference in Phoenix are a bellwether, the hotel industry faces three big issues: the legislative and executive environment in Washington, the industry’s failure to raise rates to match the climb in occupancy and the ongoing threat from online travel agencies like Expedia, Travelocity and others.

No matter the topic of the more than 30 panels at the three-day executive retreat, nearly every speaker had an opinion on one or more of these hallmark issues. While it was hard to gauge which subject drew the most passionate talk from speakers and attendees, perhaps it was the current political climate, which many speakers blamed for the industry’s inability to shake its doldrums.

“In my 50 years in the hospitality industry, I’ve never seen Washington as dangerous to business as it is today,” said industry legend Mike Leven, who’s now president & COO of Las Vegas Sands Corp. Other speakers, like Choice Hotels’ Steve Joyce, think the fault is ours.

“As an industry, we’ve been very poor at making our case to the public,” he said in a not-so-subtle slam against the AH&LA and other trade groups representing the industry. (Oddly, Best Western’s David Kong, current AH&LA chairman, was sitting next to Joyce on stage but never spoke up in defense of the association.) “Any politician needs to know a price will be paid for the kind of rhetoric (that harms the tourism industry). We need to put together a significant war chest to fight back.”

The topic of OTAs drew a more mixed reaction. Some speakers, like IHG’s Jim Anhut, believe individual operators need to be more proactive to not be victimized by predatory practices from the OTAs. “It’s a valuable distribution channel when used correctly,” said Anhut, the firm’s chief development officer in the Americas, “but some franchisees just don’t do the math to see what OTA channels are costing them.”

Tom Magnuson, CEO of Magnuson Hotels, was less wary: “We believe OTAs are our best friend. Our independent members just want distribution, and they don’t care where it comes from.”

While the inability of most hotels to raise rates continues to rankle many executives, few had any concrete solutions to the problem. Sadly, as STR’s Vail Bloom showed in her presentation, industry occupancy was up five percent through August, but rates are down one percent over last year, which was a dismal one.

“We’ve failed as an industry to recognize our demand strength and react accordingly with increases in rate,” said La Quinta President & CEO Wayne Goldberg. “It’s a problem mostly of our own doing.”

Eric Danziger last year said he wanted to take Wyndham Hotel Group to the moon. He wanted to create a goal so outlandish it was thought to be impossible, much like his idol’s bold declaration in 1961—when President John F. Kennedy announced his intention to send a man to the moon.

Earlier today, at the opening general session of the inaugural Wyndham Hotel Group Global Conference, Danziger outlined his moon, saying the goal was to become “the world’s leading hotel company in size, customer value and performance.”

The big news of the session was Danziger’s announcement that Wyndham Hotel Group would franchise and manage hotels under the Planet Hollywood brand. It comes on the heels of the recent acquisition of Tryp, the select service, mid-priced brand with locations in some of the world’s iconic cities like Paris, Madrid and San Paulo.

Wyndham Hotel Group still has its core brands of franchise-driven economy and midscale chains like Super 8 and Days Inn, but it also is driving growth through the Wyndham brands, Tryp and now Planet Hollywood.

As further evidence of the company’s transition from franchise giant to hotel company (it still doubles as a franchise machine), Danziger brought all 12 (and now 13) brands together at the conference at Mandalay Bay in Las Vegas. Instead of multiple events by brand through the year, 5,700 owners, general managers, corporate staff and vendors attended the event.

Rather than a company of 12 separate parts, Danziger presented Wyndham as one company—a hotel company—with 12 (now 13) parts working together. His mission—titled Apollo (the rocket that sent Neil Armstrong to the moon)—includes more cross selling and marketing and other ways to take advantage of the size and scale of the company with more than 7,200 properties and 607,000 rooms globally.

Danziger’s opening session was light on business details, but heavy on leadership and entertainment. He landed on stage, literally, via space ship, recreating the moon landing. He quoted, dressed up and reenacted scenes from movies like Star Trek, Pirates of the Caribbean, the Wizard of Oz and Avatar. The message throughout was leadership and breaking barriers, with a healthy dose of comedy and corniness mixed in.

The session ended with the executive leadership team performing two songs as a band—Earth, Wyndham and Fire. Many of the execs learned to play instruments as part of the team building exercise, and some, like front man and lead singer Jim Alderman, obviously had some prior experience.

You can bet the songs—“I’m a Believer” and “Break on Through”—were chosen for a reason. There clearly is a method to Danziger’s madness.

There’s been a lot of bad news coming from the nation’s capital in recent years. But for the hotel industry, that trend has reversed, perhaps temporarily, in the past few weeks. Hotel owners and owners of all small businesses scored a major legislative victory last week as the Senate passed the Small Business Jobs Act.

If passed by the House, as is scheduled to happen this week, and signed by President Obama, the new law should help entrepreneurial hoteliers in a number of ways:

• It will create a $30-billion capital investment fund community banks can use to extend financing to hotel owners.

• It increases the SBA (7) loan limit from $2 million to $5 million, enabling more developers to secure enough financing to build smaller, primarily limited-service hotels.

• It provides $12 billion in tax relief to small businesses over the next 10 years.
While not a panacea for all that ails the hotel business, this measure should help the industry as it slowly recovers from the effects of the nation’s crippling recession and the near meltdown of the financial industry.

It’s not all clear sailing, however. Congress has several bills to consider that have the potential to do more harm to the hotel industry than the good the small business jobs bill achieves. One, the Employee Free Choice Act, would greatly simplify unionization of the hotel industry, even at very small hotels. The other, the Internet Travel Tax Fairness Act, would exempt online travel agencies from paying room occupancy taxes and unfairly shift the burden to hotels.

There’s more to worry about: The Department of Labor says it plans to step-up its audits of the hospitality industry starting next month as it seeks to find businesses violating labors laws related to minimum wage, overtime pay and immigration documentation.
The hotel industry needs to celebrate its successes while keeping a constant vigil for other challenges on the horizon.

The head of Choice Hotels International, CEO Steve Joyce, will be the first boss featured when the second season of ‘Undercover Boss’ premieres on CBS Sunday, Sept. 26 at 10 p.m. According to a release from CBS, Joyce will work the frontlines—doing everything from manning the front desk, cleaning rooms, plunging toilets and working with a maintenance crew—at the world’s largest Econo Lodge.

Steve Joyce goes undercover

The show, which I’ve never seen, follows a different exec every week as they go undercover to work alongside employees, at lower levels of the company I presume. Should be a good time to see Joyce in action and I’m sure there will be several thousand Choice franchisees glued to the TV. I imagine it will provide some good fodder for the next Choice convention.

My DVR is set. Hope to eventually chat with Joyce about what he learned from the experience. Great Wolf Resorts CEO Kim Schaefer was already announced as an upcoming boss to be featured.

As Richmond McCoy told me last week, this is a “historic buying opportunity in the hospitality space.” McCoy, the CEO and founder of UrbanAmerica, a prominent real estate private equity firm focusing on urban centers, isn’t alone with those feelings.

Jeffrey Fisher, chairman and CEO of Chatham Lodging Trust, recently said almost the same thing. “This is the best buying opportunity in my lifetime,” he told H. Lee Murphy for an upcoming story on the lodging industry in our sister publication, National Real Estate Investor.

Just yesterday, these transactions were announced.

• Churchill Downs agreed to buy Harlow’s Casino Resort & Hotel in Greenville, MS for $138 million. CDI is funding the purchase with cash and the company’s credit line.

• Full House Resorts agreed to buy the Grand Victoria Casino & Resort in Rising Sun, IN for $43 million (using $20 million in cash).

• DiamondRock Hospitality acquired the 169-room Hilton Garden Inn Chelsea New York City for $68.4 million (an all cash purchase for the REIT).

Many of the sizable acquisitions are from all-cash buyers like REITs. Pebblebrook Hotel Trust is a prime example, with recent purchases of the InterContinental Buckhead Atlanta for $105 million, the Sir Francis Drake in San Francisco for $90 million and the Monaco Washington DC for $74 million.

With RevPAR rising faster than expected—Smith Travel Research has revised its 2010 forecast three times with more optimistic projections each time—buyers are once again becoming bullish on lodging assets. HVS, as Stephen Rushmore details in his most recent story, projects in many U.S. markets hotel values will recover to the record levels of 2007 by 2013.

McCoy, whose firm was just honored as Hilton’s developer of the year, said he’s looking for more opportunities in the lodging world after such success with his first hotel acquisition, the Doubletree Resort Orlando – International Drive.

The challenges, of course, are finding the capital to take advantage of the discounted prices and having the patience to hold the asset for more than a year or two while the industry returns to its previous levels of success.

But if you can, now may be a once-in-a-lifetime opportunity.

As occupancies rise and rates slowly creep up, hoteliers are getting optimistic about the rest of the year and beyond. While optimism can be contagious and beneficial, it has its limits, particularly in this economic environment.

The hotel industry got some good news and some troubling news last Friday. The good news was STR’s release of industry operating results for the previous week. Occupancy rose 10.6 percent to above 60 percent, rates inched up 2.4 percent and RevPAR climbed an astonishing 13.2 percent. These were all heartening signs for the hotel industry’s ongoing recovery.

Yet on the same day, the federal government released its latest jobs report, and the news was decidedly mixed. The only positive employment signs in July were the 67,000 jobs added in the private sector of the economy. The rest of the news was grim: the country recorded a net loss of 54,000 jobs and unemployment rose from 9.5 to 9.6 percent. Manufacturing accounted for 27,000 lost jobs, while financially strapped state governments shed 14,000 additional workers.

This jobs report and the other mostly depressing economic news we’ve heard lately should give hoteliers pause as they contemplate their futures. The economy, and ultimately the hotel industry, depends on the country’s employment picture. Not until unemployment eases and businesses begin to hire workers in significant numbers will the economy and the mood of the country improve. These are the key data points—not hotel industry performance—you should focus on as you make your budget and operating plans for the coming year.