Are Hotels A Predictor Of City Success? - Study On Hotel Properties And How They Influence The Success Of A City - By Melinda McKay - Senior VP Jones Lang LaSalle Hotels
Chicago, As part of Jones Lang LaSalle's Winning Cities and Property Futures research projects, Melinda McKay, Senior Vice President of Jones Lang LaSalle Hotels, has authored a study on hotel properties and how they influence the success of a city. Winning Cities is a Jones Lang LaSalle/LaSalle Investment Management research program aimed at defining the essence of competitiveness in cities of the future and using this analysis to pick winning...
There is much evidence to suggest that hotels are a leading indicator of future property and economic performance. It is generally accepted that the daily 'rent' of hotels serves as an immediate reflection of economic prosperity. But what about hotels' ability to act as a barometer for the future sustained growth of a city?
According to McKay, the reality is a combination of the two. Leisure is a common theme, characteristic of the success of Las Vegas, Dubai, and to a lesser extent, Dublin, which were identified as the winning cities of the past decade. Las Vegas provides the most poignant example of how leisure acts as a leading indicator.
"Over the past 10 years, Las Vegas has found that newer, bigger and glitzier hotels have created new demand, bringing visitors to see the latest and greatest hotel," stated McKay.
Typically, leisure will also act as a leading indicator in emerging markets and when governments attempt to stimulate city growth via 'master planning' or 'city renaissance' type initiatives. Convention centers are a classic example of the latter.
"Often a city will sponsor the development of a convention center as a central component in its growth program. Key catalysts of success for such a strategy include the adequacy of hotel infrastructure and access--particularly air lift," included McKay.
For example, according to the Salt Lake City Convention Bureau, since the Winter Olympics the city has accommodated more convention delegates in the last 10 months of 2002 than ever experienced in a single year. This is even more impressive when you consider that the Olympics effectively 'swallowed' the first three months of the year.
Would we really have predicted 10 years ago the power of leisure and the lasting "Guggenheim effect" in the repositioning of a little known city like Bilbao? Yet cities must be careful about relying on the "build it and they will come" theory.
"Key investment and growth principals, such as transparency, labor market flexibility and favorable tax regimes still remain critical to sustainable success," noted McKay.