News for the Hospitality Executive
Considering Options for Dealing with Troubled Hotel Assets
The Operative Word for the Hotel Industry Today Is "Reset"
By Jim Butler, June 19, 2009 - Mark Woodworth and his colleagues at PKF Hospitality Research have released PKF's latest report on the U.S. lodging industry, it's turning points and prospects. I thought you might find it useful as you consider options for dealing with troubled hotel assets, and hope you will keep us in mind as you face coming challenges.
Highlights of the PKF updated forecast
The PFF report is a little startling. I found the following points noteworthy:
As expert after expert told us in May at our Meet the Money® 2009 conference, the operative word for the hotel industry today is "reset". This means a complete reset in hotel values, leverage and financing structure.
While Steve Rushmore of HVS is projecting a 45% decline in hotel values, bottoming out in 2010-2011 with a recovery in 2014, the de-leveraging of hotel investments, increased cap rates, and scarce financing will make hotel investments problematic for some time.
Good news for those who can last to 2011 and 2012
The PKF report forecasts an exceptionally robust recovery when it finally comes in 2011 and 2012. PKF foresees an average annual increase in RevPAR of 9.2% for those years, with profits rising 17.8%. They conclude with: "If you are an owner, investor, or lender that can weather this year and next, the return to prosperity should be strong and quick."
About the Author:
Chairman, Global Hospitality Group
Jeffer, Mangels, Butler & Marmaro LLP
1900 Avenue of the Stars, 7th Floor
Los Angeles, CA 90067-4308
(310) 201-3526 direct
|Also See:||Is Leverage Dead or Just Deadly -- a Controversial New Investment Reality Nay be Taking Hold / Jim Butler / May 2009|
|Hotel Borrower Dilemma: the Note Is in Default or Coming Due; Helping Borrowers Create Value with Distressed Hotels / Jim Butler / April 2009|
|Terminating Hotel Management Agreements without Liability / Jim Butler / Arpil 2009|