Meet the Money Conference Wrap Up - Hallways Buzzing with Deals Among the Nearly 400 Attendees / May 2004

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Meet the Money Conference Wrap Up - Hallways Buzzing
with Deals Among the Nearly 400 Attendees

LOS ANGELES, May 12, 2004 � Meet the Money, the hotel industry�s closely-watched conference that provides up-to-the-minute information on industry and lending trends, attracted a record number of participants this year, according to Jim Butler, conference founder and Chairman of the Global Hospitality Group in the law firm, Jeffer Mangels Butler & Marmaro LLP (JMBM). Nearly 400 industry executives came together for the 14th annual event, held recently at the Sheraton Gateway LA Airport Hotel.

�We think the level of attendance, the high energy levels in all the sessions and major networking in the halls are all very strong indicators that 2004 will be a very big year for hotel transactions,� Butler said. �I haven�t seen this level of optimism and activity in at least four years. More than 70 debt & equity financing sources representing billions of capital were on hand and highly visible on panels and in earnest conversations in the halls.�

Echoing that sentiment was William McBain, ISHP, executive vice president of Benjamin West LLP, and Patrick O�Neal, vice president PNC Real Estate/Midland Loan Services, Inc., who said that they had made contacts at the conference that could lead to in excess of 30 projects. �This was by far the most active conference of the past several years,� McBain noted.

Significant comments from the conference included:

Opening speaker Mark Woodworth, executive vice president of PKF Consulting, set the stage with a forecast of a 7.9 percent increase in revenue per available room in 2004 and a 5 percent increase in 2005. Virtually all speakers were upbeat in their outlooks for 2004 and 2005. Smith Travel Research�s Bobby Bower forecast low supply growth and record demand levels in 2004.

There was a general consensus from all speakers that interest rates will increase shortly.

Lenders expect an increase both in lending volume and loan delinquencies.

There is a shift in hotel pricing with increasing emphasis placed on 12-month forward estimates, rather than 12-month trailing actual results.

Bruce Wiles, president and COO of MeriStar Hospitality, in response to a question, recommended that owners of single assets currently financed at floating rates should probably lock in longer-term interest rates now.

Joe Green, president and CFO of Winston Hotels, noted that Wall Street currently has significant positive interest in and support for the hotel industry. �The window is open, and there are a number of successful IPOs and follow-on offerings in progress. How long the window remains open, however, is difficult to predict.�

Insurance rates that skyrocketed following the September 11 attacks are abating, according to Janice Schnabel, National Hospitality Practice Leader, Marsh Inc. �Property insurance rates could decline as much as 10 percent this year,� she noted.

Arthur L. Buser, Jr., executive vice president of Jones Lang LaSalle Hotels, recommended to buyers who have transactions under contract that they should close as quickly as possible because sellers are increasingly �re-trading� the price as the industry rebounds.

With lenders becoming more confident in the future, look for more innovative lending practices.

Concerns over rising expenses as hotel occupancies increased were a concern raised by a number of panels. Asset management will play an increasingly important role in unlocking hotel values.

Occupancy will continue to improve ahead of room rate, according to Suzanne Mellen, MAI, CRE, managing director of HVS International�s San Francisco office. �The consumer�s ability to comparison shop on the Internet may moderate rate rebound,� she cautioned. The good news is that rate deflation in 2001-2003 will push back feasibility of new supply in many markets for some time to come.

Meet the Money, founded by Jim Butler in 1990, is the hotel industry�s only one-day conference that focuses on hotel-related lending issues and financing trends and policies. In addition, the Conference provides a venue for lenders and potential borrowers to meet in a casual, networking atmosphere.

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Contact:
Diane Phillips - Conference Coordinator
Jeffer, Mangels, Butler & Marmaro LLP
1900 Avenue of the Stars, 7th Floor
Los Angeles, CA 90067
(310) 785-6707 - phone
(310) 203-0567 - fax
[email protected]
www.jmbm.com
www.MeetTheMoney.com

Also See:

JMBM's Meet the MoneyTM Conference Featured 65 Hotel Debt and Equity Financing Sources / May 2002

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