Hotel & Motel Management - May 5, 2008 - (Page 44)

44 News H&MM May 5, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Pipeline Continued from page 4 ness would not grow as robustly.” In March, Concord announced it expected to break ground on nine properties over the next 60 days. In September, Concord announced plans to build $500 million in new hotels as part of its goal to double its portfolio size to 100 owned and managed hotels by 2010, after it sold a 19-hotel port- folio of Marriott-branded properties in eight states for $440 million to Moody National Cos. “We feel our timing was fortunate in closing on the $440-million portfolio when debt was going away, if not gone, for larger transactions,” Laport said. “Having a buyer in Moody National and their great ability to execute did put us in a favorable position.” Kimpton Hotels & Restaurants scored a coup when it closed on its third fund, which it announced in March [see “New Kimpton fund boosts growth,” page 1]. Natural selection One of the effects of the credit lurch is an elimination of weak projects, according to hotel developers. “The marginal projects will go away,” said Marty Collins, president and c.e.o. of Dallas-based Gatehouse Capital. “First-time or ill-conceived projects will go away. Decent things will get delayed.” While Concord has been ac- tive, Laport said the comthought out with capital pany walked away from to the forefront. two projects earlier this Relationships are cruyear. cial at this tumultuous “We left some signiﬁtime, he added. cant money on the table,” “People with the rehe said. “We retreated lationships win,” Colfrom sites where we had lins said. “The people spent money on hiring Guay with institutional beconsultants and archi- HOLLAND & KNIGHT havior, quality sponsortects. When you [develship, good brands and op] enough, you mess up some.” more money win. And really what Collins said the situation you’re left with is a small group of can bring projects that are well people.” Joe Guay, partner in the New York ofﬁce of Holland & Knight—Hospitality, Resorts and Timeshare Group, suggested that smaller U.S.-based brands might feel the crunch more so than larger, global brands because they can’t rely on international development to help soften the blow. “Companies that rely on growth in a limited geographical region may be a little more impacted,” he said. “On the other hand, there are smaller development costs and they are more likely to franchise than be managed by a parent company.” It’s going to get worse before it gets better, according to Laport. Guay said creativity is saving some hotel projects. “If someone is trying to do a 400-room hotel, you might see a scale down, or a drop down in brand,” he said. “Overall, the deal still needs to make sense as a hotel. … Some of the brands need to put money into deals with key money, mezzanine ﬁnancing. If they want to continue their growth, they’re going to have to get creative on the ﬁnancial side of development as an equity player or mezz player.” As a real-estate attorney working with the hotel brands, Guay said the pipeline looks stacked. “Even though the deals are going forward, there are going to be some issues to line up the longterm ﬁnancing and the short-term construction ﬁnancing and lenders. We may move forward from the brand side, but there are going to be some conditions to get the deals ﬁnanced and some just might not get done.” Collins noted that’s it’s not a “nuclear holocaust” and perhaps the industry had it coming. “It’s a collection of a lot of sins being ﬂushed out and there’s a huge overreaction to it, but that’s the pendulum swing of marketed economies,” he said. shiggins@questex.com CIRCLE NO. 113 http://HotelMotel.com http://www.HotelMotel.com/digital_edition http://www.hitec.org http://www.hitec.org

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Hotel & Motel Management - May 5, 2008 Contents Pipeline Favors Established Companies 3 Palms Debuts in Upscale Tier Guests Want Reward Options Perspective Legally Speaking Marketing Matters Consultant’s Corner On Finance What Women Want Maintenance Doctor Trends & Stats Special Report: Top Hotel Brokers Design: Tune Into Music Programs Hot Products: PTACs On the Block: Silver Lining in Bleak Hotel Sales Market Events Transactions Supplier News Consumer Insight: The Importance of Creature Comforts When Traveling Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - May 5, 2008

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