Hotel & Motel Management - January 19, 2009 - (Page 36)

H&MM January 19, 2009 | HotelMotel.com 36 Special Report ALIS PANEL PREVIEW “Above $25 million—the institutional sector—is close to dead.” KEVIN MALLORY, SENIOR MANAGING DIRECTOR, CB RICHARD ELLIS Debt market leaves brokers guessing By Jason Q. Freed SENIOR EDITOR orget the fact that hotel brokers are scrambling to stay afloat in today’s market. When major players stop buying and selling hotels, it hurts the consumer too, experts say. “The churning of properties is positive for the industry and positive for the consumer,” said Kevin Mallory, senior managing director, CB Richard Ellis Hotels. “At the end of the day, you want fresh capital. You want owners to inject new capital into the market for F the beneﬁt of the consumer and the investor.” Mallory will discuss the current state of the hotel transaction market and its immediate future at The Americas Lodging Investment Summit on a panel titled “The transactions outlook.” Other lodging investment consultants and top executives at well-known brokerage ﬁrms will join him. Mallory said when the market operates smoothly—when owners and investors are buying and selling properties—property and brand standards are maintained. When capital is being stashed “The transactions outlook — What are the leading transactions specialists seeing and what can we expect in the new year?” Tuesday, Jan. 27, 11:30 a.m.-12:45 p.m. Moderator: Jeffrey A. Horowitz, partner, Proskauer Rose LLP Panelists: Arthur Adler, managing director and CEO, Jones Lange LaSalle Hotels; William M. Hodges, president and CEO, Hodges Ward Elliott; Robert T. Koger, president, Molinaro Koger; Kevin E. Mallory, senior managing director/practice leader, CB Richard Ellis/CBRE Hotels; Steven L. McKenzie, managing director, Eastdil Secured GUESS WHAT YOUR away for a rainy day and ﬁrst three quarters of the liquidity is tight, brand year, Mallory said. standards suffer. “As we came into No“This industry is invember, things slowed sanely capital reliant,” he drastically,” he said. said. “If you have ownAnd in the upper segers who feel they can’t ments, deals at $25 milafford to maintain stanlion and higher, actividards, you have an indus- Koger ty is at about 20 percent try that’s hurting. of what it was earlier this MOLINARO KOGER “While the indusyear, Mallory said. try doesn’t rely on transactions, a “Above $25 million—the inhealthy transactions market can stitutional sector—is close to really sustain it,” Mallory said. dead,” he said. “There are a couHe went on to compare the ple of rare transactions getting lodging industry to the airline in- done, and the occasional all-cash dustry, noting that if you can’t buyer.” capitalize it properly, consumers Mallory said up until recentwon’t use the services. ly, local and regional banks con“The product becomes its own tinued to be active lenders, which commoditizer,” he said. “The is why transactions in the smaller Westin becomes no different than markets were still able to get done. the Marriott, which is no differ- But even those deals are struggling ent than the Sheraton. Proper- as the year closes, he said. ties can’t differentiate themselves. Even the structure of negotiatAnd as the consumer, you don’t ing a deal has changed as of late. care which one you stay in.” Buyers and sellers are approaching Obviously these are extreme a deal with great concern, and both circumstances, but unfortunate- are careful not to get burned. ly, brokers in today’s market don’t “Buyers are coming to the marsee things getting better anytime ket with a price in mind,” Koger soon. said. “It’s important to convey that Rob Koger, president of Mo- price to sellers. If the sellers are willlinaro Koger, predicted the ALIS ing to move quickly, they can get panel won’t provide too many the deal done. If not, don’t bring surprises. the property to the market.” “We’re expecting a light year Mallory said 18 to 24 months in terms of transaction volume,” ago, buyers had to come to the he said. “The question is really market aggressively because there ‘When is it going to turn around?’ were a slew of buyers competand it’s probably going to be the ing. Terms of sales—hard monlater part of the year.” ey deposits, lighter contingencies, Koger said the problems start due diligence—were handled with ﬁnancing and the lack of debt quickly. in the market, which he called the “The seller could drive pric“overhang of the economy,” and ing,” he said. “Really, all that it said projecting performance for came down to for an execution to 2009 is difﬁcult. happen was deliverables.” “Sufﬁce it to say, if there was Today, the leverage has more debt in the market, clear- switched to the buyer. ly there would be more transac“The seller has to be a lot more tions,” he said. ﬂexible,” Mallory said. “They’re On the bright side, there are a going to have to accept some kind handful of companies doing deals of financing contingency, and right now. The economy segment that might be a 45- to 60-day pehas been fairly active in the trans- riod where the buyer can obtain actions market, and transactions at ﬁnancing. less than $25 million have a much “We used to follow a schedbetter chance of closing. Still, even ule,” he said. “Today the dynamthat market is operating at about ics are very different.” 80 percent of what it had been the jfreed@questex.com Breaking Ground The Homewood Suites by Hilton brand plans to build the ﬁrst Homewood Suites in New York. The 100-suite property will be located in downtown Brooklyn. Homewood Suites broke ground on the property in September 2008 with an anticipated completion of the hotel in September. The property will be a joint new-build with a Hilton Garden Inn and offer about 100 Homewood Suites guest suites. Construction began on a new Hotel Indigo in Athens, Ga., near the University of Georgia. The project by Rialto Property Partners LLC and Melaver, will be a 130-room eco-luxury property and will achieve gold certiﬁcation by the U.S. Green Building Council’s Leadership in Energy and Environmental Design rating system. Hyatt Hotels & Resorts and Wolf Urban Management reached their ﬁrst major construction milestone for the Hyatt Place Phoenix/ Mesa, which conﬁms the 94,000-square-foot hotel remains on pace for an April 2009 opening. The hotel will house 152 guestrooms and be the ﬁrst in the Mesa (Ariz.) area. The Moon Palace Casino, Golf & Spa Resort by Palace Resorts will be the newest addition to the company’s portfolio of all-inclusive luxury properties. Slated to open in early 2009, the resort on Macao Beach in the Punta Cana region of the Dominican Republic will house 1,791 guestrooms. Compiled by Jennifer Kovacs, jkovacs@questex.com http://www.HotelMotel.com http://www.sterifab.com

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - January 19, 2009

Hotel & Motel Management - January 19, 2009 Contents Select Inn First in Vista's Buying Plans Danzinger Chosen for Round 2 at Wyndham Perspective Energy Star Update Legally Speaking Consultant's Corner Sales Clinic Travel Trends Franchise Law Family Business Cornell Insights HotelWorld Update Transactions Careful Marketing is Key for Timeshare Debt Market Slow for Most Transactions Trends & Stats Proper Mix of Uses Leads to Profitable Partnerships Card Check, Employee Retention Big Issues for CEOs Locking Systems Televisions Fitness Centers/Spas Mattresses Ad/Editorial Index Marketplace Checking Out

Hotel & Motel Management - January 19, 2009

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