News for the Hospitality Executive
Atlas 2009 Year End Hotel Survey . . . and What it Means
|By Jim Butler
February 3, 2010
Hotel Lawyers with grim reports from the field. If lenders are looking for some encouraging news on their distressed hotel asset sales prospects, they are not going to get it anytime soon. That is what the Atlas 2009 Year End Hotel Survey shows, but it does offer some valuable tips for dealing with continued distress in 2010.
Here is an executive summary.
Atlas Hotel Survey 2009 Year End Summary
Atlas Hospitality Group specializes in the sale of California hotels. It was founded by Alan X. Reay in 1997. Since its inception, Atlas has sold more hotels in the state than any other brokerage firm. Their annual survey of hotel transactions covers only California hotel deals, but we believe it is reflective of consistent national trends.
The 2009 annual survey has just been released, and it showed dismal results for 2009:
What is happening?
I asked Alan Reay, President and founder of Atlas Hospitality Group, what he thought was causing the record low number of hotel transactions his survey reported. Alan attributes the dearth of transactions to 2 factors:
Alan says unequivocally that the restraint on sales is not liquidity or lack of buyers. It is due to lenders and other potential sellers holding back and waiting, or pricing the properties unrealistically.
What will 2010 bring for hotel sales?
Given the success in predicting what happened in 2009, what does Alan Reay predict for 2010? Here are the highlights:
What do the hotel lawyers at JMBM's Global Hospitality Group® advise?
Do the math yourself! Run a present value analysis of likely cash flows on 3 alternate scenarios. Decide whether you have the stamina and capital for a long haul if you intend to hold. Or decide that you are a gambler.
Be realistic. And if you are going to be a seller, then sell quickly.
Many experts see values continuing to decline until at least 2011 or, more
likely 2012. Some think values recover peak levels by 2014 and others think
recovery to 2007 levels is TWO real estate cycles from now (given that
a typical hotel cycle lasts 7 to 8 years, this could possibly be 10 to
16 years, i.e. 2019 to 2025).
Jim Butler is a founding partner of JMBM and Chairman of its Global Hospitality Group®. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why. JMBM's troubled asset team has handled more than 1,000 receiverships and many complex insolvency issues. But Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. For example, they have developed some unique proprietary approaches to unlock value in underwater hotels that can benefit lenders, borrowers and investors. (GOOGLE "JMBM SAVE program".) Whether it is a troubled investment or new transaction, JMBM's Global Hospitality Group® creates legal and business solutions for hotel owners and lenders. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. For more information, please contact Jim Butler at firstname.lastname@example.org. or 310.201.3526.
|Also See:||Observations: Atlas Hospitality Group 2009 Mid-Year California Hotel Sales Survey / Jim Butler / July 2009|
|Hotel Delinquencies Predicted to Exceed 8% by Year End and Other Observations for Hotel Lenders and Hotel Owners / Jim Butler / June 2009|