Ross capped his nameplate with a black swan as a dramatic symbol of his oppositional viewpoints. He pointed to infighting in the US and Europe, the fact that that US recently bailed out Europe, extending them debt; Israel’s growing isolation and very volitale Middle East; all as looming and current risky events. “There are dozens of black swans flying around,” he said. All it would take is one of them landing to create another crisis. “I don’t know what’s going to happen,” he explained, but pointed out that the mere fact most are not concerned about them is reason enough to be concerned.

Anecdotally he related a series of cancellations of 2012 plans, using this as an example of current events affecting rate and occupancy projections into next year. He doesn’t see a RevPAR decline per se, but more 0% - 1% growth, certainly not a 6% - 7% RevPAR jump in 2012. “If you’re putting money on the line, you have to be prepared for” the smaller growth rate.

If lenders stay tough, there is too much hotel paper in the market and there is no capacity for outage deals, he explained. With PIPs coming due and many owners not being able to pay for them, it will create a larger debt problem over the coming months. “Don’t buy the bullsh-- of 6% - 7%, even with no black swans landing,” he insisted.

Bluhm countered that it was a good year for cross-border M&A particularly, but where it falls apart is global business. Equity in Asia is collapsing and not a lot is happening in Europe. “We can get myopic on the US, but it’s a global financial market and it’s going to permeate,” he explained. Despite the government dysfunction in the US, he said, at least we can rally to save banks over a weekend, if necessary. Europe cannot do that with the Euro.

The real longterm problem in hotels, noted Hartmann, was simple: Debt. There are only two solutions and neither are in good standing the with public: foreclosures or bailouts. And although there is still strong activity in the future, with big products selling if the equity markets come back. If they don’t, then you “won’t see big stuff sell, the other stuff will,” he explained. Cash-flowing properties are the big sellers now, Berk said, and will continue to be. But as Ross pointed out, most of the properties are not in that group and their maturities are coming due. Berk said if it’s not a top brand and there isn’t good cash-flow, the only place to get a loan is your local banks.

Ross noted that even in that scenario, the financing will have to come with concessions and caveats. “You can work with a bank if it’s in the bank’s interest.” Berk concurred, saying, “If you’re not willing to give that stuff up, game over,” referring to costs the buyer will have assume for themselves.

Hartmann noted that with all the negativity, if you remove the debt, hotels are still very profitable business for banks, so they will try to hang onto them and keep income flowing. But private markets have a lot of money waiting to spend, and Ross predicted that they will make a move in the next year or two, possibly buying from the REITs that made purchases over the last year. Sumner Baye added his two cents from the audience noting that a lot of foreign money was coming into the US, particularly from Brazil, to buy in the US. Ross laughed and pointed out foreign money is not buying hotels in Kansas, though. The major markets are still the big players.

LaFleur did point at the silver lining. “We’ve been able to stitch together a recovery in a crappy economic environment.” The hardest hit areas are nontraveling parts of the economy, residential areas, he explained. Hartmann also noted that hotels, although concerned with eventual inflationary pressures, are buffered by a 9% unemployment rate from labor cost inflation.

Ross rounded up his dour outlook with a positive point and a warning. It’s a good time next year to buy hotels, he said, but underwrite it right; assume 1%-2% RevPAR. “I’m not saying don’t do deals,” Ross laughed. “But be careful.”