News for the Hospitality Executive
Hotel Lawyers in Phoenix:
By Jim Butler of the Global Hospitality Group®
Author of www.HotelLawBlog.com
September 26, 2011
lawyers: Are we at a turning point in the industry?
Hotel Law Blog, what happens in Phoenix does not stay in Phoenix.
not just me. The market has changed in just the last 60 days!"
A widely-held view was that it seems like someone hit the "PAUSE" button on hotel finance and purchase-sale transactions. Some fear a "reset" button may also have been tripped. The global market turmoil of the past 30-60 days triggered by the inability of our politicians to resolve deep U.S. budget issues, along with questions about political resolve by European governments to deal with their own problems continue to raise major issues.
And there are all the usual specters of big increases in taxes, continued high unemployment, sagging consumer confidence, rising labor costs, rampant inflation to deal with $14 trillion of debt, operating costs rising faster than RevPAR as well as war, plague and pestilence.
So here are some insights from industry leaders and vignettes JMBM's hotel lawyers gathered at the Phoenix Lodging Conference. In many cases we have omitted the speaker's names because I was not certain that the comments were intended for attribution.
President, PKF Hospitality Research
having a hard time being negative.
Senior VP, PKF Consulting USA
fundamentals of the industry are holding up well.
transaction side, the first part of the year was very active. We were
doing feasibility studies on new hotels.
of people are saying, "The fundamentals are good, let's keep moving."
SVP , Davidson Hotels & Resorts
numbers creates uncertainty on how to underwrite a deal.
is taking longer. Everything we have done is all cash. No debt.
think this is an opportunity for guys like us to be competitive without
to the REITs every time.
President & CEO, RockBridge Capital, LLC
don't think over the next 5 years the economy will shrink.
the right asset. Position and capitalize it correctly and you will be
of hotels need capital. There has been a standoff on the needed PIPs.
cost of debt is attractive.
Principal, KSL Capital Partners, LLC
trying to push rates, but in the last 30 days, that has not been
There is a market reset going on like in 2008.
thought to be in the middle of a very strong recovery off a low bottom,
this [development of the last 60 days] changes everything.
here are some "vignettes" or stories recounted . . .
Tom Naughton, Managing Director and Principal of Clearview Hotel
had a different experience.
not seeing same cancellations we did in fall of 2008.
President, Richfield Hospitality, Inc.
have been active on the acquisition front and will continue to do so.
returned from China where we are working on another 10-20 hotels.
last 30 days has not had much of an impact on us.
working on bringing our parent company REIT over to the U.S. to acquire
over the next 12-18 months.
President & CEO, Prism Hotels & Resorts
Half of our business is distressed hotels. We are hiring a lot of people. We have 41 new hotels coming in between now and the end of the year.
SVP Finance, Pyramid Hotel Group
you are doing is market-by-market. For example, Hawaii was great in 1st
of 2011 but not good after the tsunami hit in Japan.
have not seen cancellations yet and are optimistic about next year.
COO, Stonebridge Companies
We have not seen any impact from the recent market turmoil . But maybe this has leveled out the playing field for opportunities . And it is causing us to focus on what has to be delivered to our shareholders and owners by end of the year.
President, Bedrock Partners
challenge in the last 30-90 days is finding financing, even 50%
biggest challenge we all face is if and when financing market comes
creates an opportunity for private funds with a lots of cash available.
SVP and Director Hospitality Practice Group
Recently, it seems like our main business has been selling assets for lenders. The properties sold range from a 325-room full-service hotel to closed Days Inns.
confidence has sagged in the past few weeks. They are all taking second
are even more loath to carry back debt.
has been a pause in the market for 60-90 days.
If you are planning corporate events, you may think more about laying people off than sending 1,000 people to a seminar, or you may decide to push off the meeting from February to October.
QUOTES AND NOTES
What's it all mean?
The fundamentals for the hotel industry are good! They are improving. The stage is set for continued improvement in ADR and profit margins. But some are having trouble in pushing rate while others are not.
Will our Congress resolve the postponed budget crisis or will the U.S. take another hit to its credit rating? And how about Europe? What will happen with Greece, Italy, Spain and Portugal? Will the euro survive? Can slowing economies in the US and Europe avoid slipping back into a global recession?
Will the political mess, volatile markets and business uncertainties keep leisure travelers home and lead businesses to curtail travel? Or will the bifurcated economy continue to see the employed continue to travel, and businesses proceed to book hotel rooms on pent up demand.
The next few weeks should tell us a lot. There is either a more level playing field and great opportunities for those with cash, or some very uncertain times ahead. Maybe a 3-5 year investment horizon solves those uncertainties. Or maybe it doesn't.
This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $60 billion of hotel transactions and have developed innovative solutions to help investors be successful in bidding for hotel acquisitions, and helping investors and lenders to unlock value from troubled hotel transactions. Who's your hotel lawyer?
Jim Butler is a founding partner of JMBM, and Chairman of its Global Hospitality Group® and Chinese Investment Group™. Jim is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" and you will see why.
Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.
JMBM’s Global Hospitality Group®
The hotel lawyers in the Global Hospitality Group® of Jeffer Mangels Butler & Mitchell (JMBM) comprise the premier hospitality practice in a full-service law firm and are the authors of the Hotel Law Blog. We represent hotel owners, developers, investors and lenders and have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,000 properties worldwide. For more information about the Global Hospitality Group®, go to www.HotelLawBlog.com. For more information about full range of legal services provided by JMBM, go to www.JMBM.com.
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Lawyer with nuggets from JMBM's Meet the Money® 2011 / Jim
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