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National Association of Black Hotel Owners, Operators and Developers are
Urged to "Buy Now" Although Financing May be Difficult to Obtain

By Joel Poelhuis, The Miami HeraldMcClatchy-Tribune Regional News

Jul. 25, 2009--Tourists are staying home, businesses are slashing travel budgets and getting financing for real-estate investments is harder than ever. A June report by Morgan Stanley analysts predicted hotel loan delinquencies will reach 8 percent by year's end and could top 10 percent.

The worst of times for the hotel industry could be the best time to buy in.

That's what the National Association of Black Hotel Owners, Operators and Developers is trying to persuade minority business owners looking to diversify their holdings.

The group met this week at the 13th annual International African American Hotel Ownership and Multicultural Tourism Summit and Trade Show in Doral to discuss industry issues such as the recession, unionization and competition from Internet conferencing.

To be sure, there was plenty of doom and gloom at the conference.

"I just don't think there's enough demand to go around right now," said Warren Fields, a NABHOOD board member and principal at hotel management group Pyramid Advisors, which owns Doral Golf Resort and Spa, where the conference met.

"The luxury brands are in very serious trouble," said Richmond McCoy, president and CEO of development group Urban America.

"[Business] people don't want a high-end hotel showing up in their expense report."

"The 'may' vacations are getting huge -- which is 'I may do it, I may not,' " said Carol Williams, head of an advertising agency that promotes tourism.

But conference attendees seemed to agree that the crisis represents an opportunity for investors with cash on hand to pick up hotels at half-off prices.

"As entrepreneurs, the best deals you make are in a down economy," McCoy said.

The problem is finding the money to make those deals. McCoy said that to buy a hotel today a buyer may need as much as 60 percent in cash because lenders are scrutinizing loan applications much more closely.

Miami hotel owner Hermant "Henry" Patel said sellers are being forced to finance properties themselves.

Most attendees agreed that the end of the crisis is still a ways off.

"The travel industry tends to lag six to nine months behind the recovery," Fields said.

Patel said he expects Miami hotel properties to continue to flood the sales market in the next four-to-six months.

He said he hopes for a rebound by the beginning of 2011.

NABHOOD was founded in 2001 by president Andy Ingraham to increase executive-level jobs for minorities in the hotel industry.

NABHOOD chairman Michael Roberts said the group modeled itself on the Asian American Hotel Owners Association, which sent several members to the Doral Conference, including president Tarun Patel.

Fields said he has survived tough times in the past. He mentioned financing a hotel in late 2001 after the post-9/11 tourism freeze.

"The business is very cyclical," Fields said. "You have to be able to ride out the cycles. Every cycle presents its opportunities."

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Copyright (c) 2009, The Miami Herald

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