Hotel & Motel Management - May 19, 2008 - (Page 42)

42 On the Block BRANDS H&MM May 19, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition The importance of branding when buying IN THE details Brands impact hotel sales In the purchasing process, certain guidelines exist to help ensure you’re making the right purchase, and the beneﬁt of ﬁnding the right brand for the property and the buyer include: Lower pricing Higher long-term value Opportunity to upbrand By Emily Hanna ASSOCIATE EDITOR done deals The Mumford Co. arranged the sale of the Days Inn of Indianapolis. The hotel, which will remain a Days Inn, was sold on behalf of a Bowling Green, Ky.-based seller to Westloop Hotels LLC. Westloop Hotels will relocate from California to Indianapolis to manage and operate the hotel. Optimum Hotel Brokerage closed the sale of the 112-room Kenilworth (N.J.) Inn. Brix Hospitality, a New Jersey-based owner and operator, purchased the full-service hotel from Kenilworth Capital. In addition to an outdoor pool, a full-service restaurant and lounge, banquet and meeting space, and a business center, the property also includes a 1.5-acre parcel, which could be used for future expansion and development. including extensive product improvement plans before granting its ﬂag. Then, according to Post, focus on what market you want to appeal to and what sales and marketing efforts you’re willing to undergo to attract that market. Moving on up If possible, brokers said to upbrand by renovating and converting the hotel to a higher segment. “Better quality standards, better operational support, more effective marketing and a higher volume of property level reservation production are all more readA strong family is important. “Hilton, Marriott and [InterContinental Hotels ily available as you move up the Group] brand families are in particular demand in the mid-market/focusedfranchise ladder,” James said. service arena at present,” said Ed James, principal at The Mumford Co. However, upbranding an existing property can be difﬁcult, as brands gen“But, if we’re talking about maxi- lates to current and hiserally prefer new-build mizing the sales statistics, such as torical operational reproperties. cap rates and revenue multipliers, sults and prospects for “Everybody learned oftentimes the non-branded ho- the future.” When choosing a from the old Holiday tels will bring a lower cap rate and Inn [errors], when it took higher room revenue multiplier brand, it’s important to suit the needs of the purthem too long to make because there’s clearly upside.” the difﬁcult decision to While he said boutique or up- chaser and the property. “Look at the locastop franchising existscale hotels in Hunter ing product and to redestination ar- tion ﬁrst, the brand sec- HUNTER REALTY quire new-construction eas can suc- ond and age third. It will [hotels] in the market,” ceed without a tell you what’s the future Hunter said. “Everybody saw that brand’s back- of the hotel,” Hunter said. mistake, and nobody’s going to ing, Post notmake that mistake again.” ed some loca- Status check Another mistake to avoid: setions, such as To help narrow the choices of off a highway which brand to select, take into lecting the wrong franchisor. James or near an air- account the current state of the “With the midscale and econoTHE MUMFORD CO. port, require a property—its age, its facilities and my brands, it’s pretty important anticipated renovations—then to choose a franchisor that’s solbrand. check brand standards to uncover id, established and has a good repBrand awareness which segment the property feasi- utation because there are many The selection of a brand can be bly could fall under. more choices in those segments, critical, said Ed James, princiBrand standards might vary and you have to be a little more pal at The Mumford Co. “Brand on the amount of renovation re- careful in who you’re partnering identiﬁcation has a huge impact quired; better franchises have with,” Post said. on a hotel’s value, both as it re- tougher requirements, sometimes ehanna@questex.com THE MUMFORD CO. hen purchasing a hotel, the property’s quality, location and age all play major roles. But what brand to choose, if any, could be the most important decision. A brand’s impact on pricing is varied. Because trusted brands have proven less risky investments, lenders might offer lower pricing—one-fourth to one-half of a percentage point for better brands—and lower capitalization rates, which could decrease as much as 100 basis points, according to Teague Hunter, executive v.p. of Hunter Realty Post Associates. AMBER HOTEL CO. However, Steve Post, president of Amber Hotel Co. in Malibu, Calif., said lower cap rates also could come as a result of choosing not to brand. “To maximize the value of a hotel or motel, you certainly have to have the right brand,” Post said. W The Sleep Inn in Concord, N.C., was sold for an undisclosed amount to S D Hospitality. The Mumford Co. represented the seller, David Drye Co., in the transaction. The 82-room property will remain a Sleep Inn and will undergo cosmetic renovations. The Chicago ofﬁce of Molinaro Koger facilitated the marketing and sale of the AmeriSuites hotel Chicago/ Schaumburg [Ill.], on behalf of VK Suites, a Milwaukee, Wis.-based private investment ﬁrm afﬁliated with VK Development. Atlanta-based Noble Investment Group acquired the 126-room AmeriSuites as its 11th acquisition in the Noble Hospitality Fund LLC. The hotel will undergo a comprehensive $5-million dollar repositioning and will re-open as Hyatt Place Chicago/Schaumburg later this year. Compiled by Emily Hanna, ehanna@questex.com Sanford, Fla. Hotel investment services ﬁrm Hunter Realty Associates represented and advised the seller in the recent sale of the SpringHill Suites in Sanford, Fla. The 105-suite property was purchased by Apple Hospitality REIT and will retain the Marriott ﬂag. Located between Orlando and Daytona Beach, Fla., the SpringHill Suites Orlando North/Sanford features an outdoor pool and Jacuzzi. It also has meeting space for up to 90 people and boardroom seating. HUNTER REALTY http://HotelMotel.com http://www.HotelMotel.com/digital_edition

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - May 19, 2008

Hotel & Motel Management - May 12, 2008 Contents Hotelier of the Year Leads Team to Victory Sheraton Builds on International Success Slower, Smaller Transactions in First Quarter Perspective Legal FAQ What Women Want Sales Clinic AAHOA Update Franchise Law Family Business Travel Trends Guest Column HotelWorld Update Trends & Stats Cleaning and Maintenance H&MM's 2008 Franchising Fees Guide FACs Evolve to Meet Brand, Owner Needs The Importance of Branding When Buying Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - May 19, 2008

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