News for the Hospitality Executive
Conditions for Hotel Industry "RESET" May be Coming into
|By Jim Butler, July 14, 2009
My friend Steve Van at Prism Hotels has a great Hotel Default Blog. His most recent article ("The Sky is Really Falling") sparked some perspective on whether the hotel industry is finally reaching a critical RESET point. Here are the latest thoughts.
Is the "RESET" at hand?
The hotel industry will not get better until we have a complete RESET, but maybe the conditions for that may finally moving into place. Here are the latest indicators:
1. The last optimist died. On July 7, 2009) Smith Travel Research threw in the towel on their formerly "optimistic" forecast and have adopted a "bleak picture" forecast for 2009, and continuing deterioration in 2010 for all three industry benchmarks (occupancy, average daily rate and revenue per available room).Blessing in disguise?
Unfortunately, the hotel industry won't start to get better until well after the economy bottoms and starts to make significant and sustained improvement. With the capitulation of Smith Travel's optimism yesterday, most industry experts don't see significant improvement for hotels until sometime in 2011. And things will get much worse before they get better. But at least a realistic view of immediate prospects sets the stage for the massive RESET that must take place before the hotel industry improves -- a RESET in leverage, values and expectations. Ouch!
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:||Hotel Bankruptcy Issues -- Special Purpose Entities Getting Approval to File Bankruptcy / April 2009|
|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|