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2011 - A Year to Forget, 2012 - A Year to Remember?
Mitchell Parker, ISHP The Parker Company

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February 2012

In 2009 I wrote an article about the dire state of the hospitality industry and that it was important to look at our previous gains and not our current losses. It is now 2012 and I thought it would be a good time to reflect on 2011 and where we may headed.

At the outset of 2011 I was not very optimistic. It certainly appeared to me, based on the low number of proposals being generated, that sadly 2011 was an extension of 2010. Unfortunately for many of the purchasing groups, 2010 was much worse than 2009 as the loss of project work finally caught up with the purchasing agents, which significantly impacted revenue. 2010 also proved to be high in personnel cutbacks and had us all looking for further reductions in expenses that may have been missed in 2009. In addition to the anemic level of new project starts, and with renovation work scopes decreasing, we worried our way through quarters 1 and 2.

At the halfway mark, I was even more concerned as the request for proposals did not increase and the client credit crunch still seemed to be a mountain not easily overcome. The general consensus of my peers only validated my anxiety and we were all wondering what to expect in quarters 3 and 4.

It was about mid-year that I questioned the resiliency of our fee models and began to see if there was any better ways to skin the cat. Our biggest challenge seemed to be that the two plus years of lower than needed projects was eroding our fees in a competitive vortex leading nowhere but downward. Our industry needed a boost and some supply and demand Economics 101 to get back on track. Q3 & 4 were sorely needed to salvage the year.

Nothing much happened and as we approached the 4th quarter with only a marginal glimmer of encouragement. Then almost as if a cloud lifted, the spigot turned back on and new prospects and new projects came out of hiding. Things were looking up and 4Q turned around the entire year. I am not sure what exactly happened. I think delayed and cancelled projects came back to life and the economic outlook was trending upward.

Before you knew it we were ringing in the New Year - 2012 and great expectations. Will 2012 continue to trend up? Early feedback from ALIS is positive and certainly there seems to be an expectation for more plentiful projects and hopefully better fees as we move forward. No one seems to think we can return to the pace leading up and through the 2007 frenzy, but a slow and steady increase in project work would serve to bring a level of consistency that everyone in hospitality is hoping for.

In 2009 I wondered if we should we be singing the blues. In 2012 we may not be singing glorious songs from the rooftop bars, but we should be singing in a new cycle of prosperity. Let us all hope that the banks can get back to realistic lending practices that will encourage new development and that our clients recognize the value we bring to the table, so we can get back to the winning combination of purchasing and profitability. I am thinking positively about 2012, even if the Mayans think otherwise.

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