"We've seen that the Fed has been creative and dusted off the history books to see what tools are at its disposal," said Chandan. Despite this, the cost of capital in the debt market is significantly higher than a year ago. The spread between Libor and Treasury is 140 basis points, versus 20 basis point a year ago, he noted. In the current market, "All deals are being priced as though they're of low quality," Chandan said. Therefore, he said, "Anybody who comes into this market with a significant amount of equity has a great advantage."

Noting the changes in the market compared to a year ago and the palpable uncertainty he sensed among conference attendees, deRoos joked, "the smell of fear is different than the smell of greed." He identified several realities of the present: cap rate expansion, cash flow risk, conservative underwriting and more expensive debt capital. "What this means for everyone in the room is that your holding period just got longer," he said.

Success, deRoos said, lies in understanding the fundamentals, understanding portfolio dynamics and understanding the capital markets. He noted that 2008 will be a good year to make equity investment and divestment decisions, adding that this will also be a year where picking markets is more important than picking individual properties.

Freitag projected that the industry's overall occupancy rate will be flat this year: 63%, compared to 63.2% in 2007. He noted that while the first quarter occupancy numbers will look "pretty painful," the March and April monthly numbers should be taken together for a truer picture. Although supply will continue to outpace demand as thousands of keys are added nationwide, demand growth will be positive this year, increasing by 1.4%.

In the construction pipeline, Freitag noted, the number of keys at the "final planning" stage is way up from a year ago, indicating that developers are more cautious about actually starting construction. Aside from certain markets, the condominium hotel format is "dead" in terms of new development; Freitag pointed out that condo hotel projects totaling 11,500 keys were abandoned in '07, compared to 2,900 abandoned keys in 2006.

Economic downturn or not, STR predicts a 4.7% growth in room rates in 2008. Freitag noted that while some observers "think we're on crack" for making this prediction, "we believe that number is achievable if hotel operators listen to their lesson from after 9/11." In the travel slump following 9/11, operators cut room rates indiscriminately in an unsuccessful attempt to spur occupancy.

Between Chandan's presentation and "Predicting the Next 12 Months," there were breakout sessions featuring panels of industry experts. Among these was a session on whether brands can help owners in getting deals done. "We have yet to find that a brand can really help in acquiring capital," said panelist Ashwin Patel, president of Southwest Hospitality Management. Bill Sipple, VP of development at Carlson Hotels Worldwide, observed that the question of whether brands will kick in equity depended partly on whether the owner was pursuing a franchise model or management contract model.