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As Hotel Revenues Decline, Hotel Turnaround
 Specialists Looking for Profits
By Douglas Hanks, The Miami HeraldMcClatchy-Tribune Regional News

February 9, 2009--As hotel revenues decline, Victor Lopez sees profits in the retreat.

Lopez, a former senior Hyatt executive, has partnered with other former high-ups in the travel industry to offer turnaround services for struggling hotels.

"We know just where to look and what to ask," said Lopez, who quit as Hyatt's Latin America development executive in 2007 and now is a partner at Caribbean Resort Advisors.

As hotels face a downturn expected to be more protracted than the post-9/11 travel decline, Lopez won't lack for potential clients. It's the competition he'll need to worry about.

"Everyone's a hotel-turnaround specialist now," said Mark Lunt, a hospitality analyst with Ernst & Young in Miami.

At a recent industry conference in San Diego, Lunt said he frequently ran into former top lodging executives now offering their expertise in rescuing distressed hotels.

Known as asset managers or owners' representatives, the executives typically supervise the company contracted to manage a hotel for an owner. Generally they are paid a percentage of revenues plus performance bonuses.

The ample supply of would-be "owner reps" stems in part from executives leaving hotel companies amid downsizing and declining bonuses. But demand also is at work as a once-booming hotel sector faces its first real hard times the post-9/11 stretch.


Between then and now, a number of wealthy investors jumped into the lodging industry and now find they need some help.

"There are a lot of more inexperienced owners because of this last upswing," Lunt said.

In South Beach, Jessica Goldman-Srebnick hopes to expand her family's hotel portfolio by for the first time running a hotel her family doesn't own. The company her father, Tony, started 40 years ago, Goldman Properties, has launched a management arm. Its target: competitors along Ocean Drive and elsewhere. "We know this market," Jessica said. "We have a really strong expertise here."

She expects the industry's ongoing hardships to gin up business, be it from a small hotel owner hoping to save money by sharing resources or a bank foreclosing on a distressed property.

"We've had a number of people who have talked to us about it," she said.

A recent study by PKF Hospitality Research in Atlanta predicted an 25 percent increase in insolvent hotels nationwide this year. The same firm forecast a 6.9 percent decline in hotel revenue in Miami-Dade, easily South Florida's largest lodging market.

"There's not much in-between in the hotel business," said Mark Ellert, whose Fort Lauderdale firm, IAG Florida, sells hotels and occasionally oversees them for owners. "Generally they're very, very good or very, very bad. They can lose money very quickly as revenues fall off."

Lopez was a longtime general manager who eventually supervised all Hyatts in Latin America, Florida and the Caribbean. He says that makes him immune from the industry-speak and complications many hotel operators direct toward owners in excusing poor performance.

"We can't be bs'd too easily. We've been there too long," Lopez said.


Lopez and his partners are pitching their ability to cut costs for struggling hotels. While the boom years saw hoteliers racing to offer the fanciest mattress and swap old sets for flat-screen televisions, the downturn will have many owners watching their profit margins vanish.

"If they aren't demanding the operators do everything in their power to operate lean, mean and hungry," he said, "then they are making a big mistake."


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