Hotel & Motel Management - July 21, 2008 - (Page 38)

News LIIC’s mission H&MM July 21, 2008 | HotelMotel.com LIIC roundtable Continued from page 1 less than 1 percent versus the 3 percent that was forecasted in the industry,” Cahill said, “but we’re not getting much feedback from the operators about things going south or things going bad. And then you have these macro forecasts that are showing a signiﬁcant drop-off.” Kevin Mahoney, c.o.o., Stonebridge Cos., a development and management company with 36 hotels in its portfolio, said his company is in fact experiencing a drop-off in occupancy. “Demand is an issue, and it’s going to be for quite some time,” Mahoney said. “It’s now starting to show up in the Smith Travel Research numbers.” Mahoney said Stonebridge has been able to use revenue-management tools to hold rates steady, but if occupancy dips much lower, he said, there will be a signiﬁcant decline in RevPAR. The slipping of occupancy clearly is an issue, but how far it will dip before travelers start hitting the roads again is unclear. “If we’ve started to slide, how far are we going to slide?” asked Greg O’Stean, executive v.p. and managing director of hospitality, General Electric Real Estate. “When’s it going to stop? When is the tipping point when we hit bottom and you start back up? Nobody seems to know.” “There has been almost a 1-to-1 correlation between [gross domestic product] and the hotel industry for many years,” added Jim Butler, partner at Los Angeles law ﬁrm Jeffer Mangels Butler and Marmaro LLP. “If any of us think that we’re going to do well and the economy doesn’t, that’s a bad joke. “It’s history being replayed,” he continued. “If you tell me what’s going to happen to the economy, I’ll probably have a much better guess on what’s going to happen to the hotel industry.” Lack of debt The sluggish economy is not only slowing travelers, it also is affecting the number of transactions—both sales and development of hotels— being executed throughout the industry. Debt is harder to obtain, and the industry is experiencing what O’Stean called “the hangover from July of last year, when people stopped doing [commercial mortgage-backed securities].” Butler said the 800-lb. elephant in the living room is liquidity—or lack of it. “[The halt of CMBS loans] has had an obvious impact upon the ﬁnancability of purchase and sale, new development, virtually every aspect of the business,” Butler said. “We’re now looking at a giant staring contest between those who believe there should be a pricing adjustment and those who say, ‘My cash ﬂow today is better than it was last year.’” Sean Hennessey, c.e.o., Lodging Investment Advisors, compared the shutdown of CMBS lending to the early ’90s when the insurance industry stopped lending to the hotel industry. He said it took a number of years with little activity before the CMBS lenders emerged with a solution. “The industry has lost its dedicated lender,” Hennessey said. Abid Gilani, senior v.p. of mortgage banking, Marriott International, said the smaller valued deals—those at $30 million and below—still are getting done, even at above 70 percent loan-to-value. It’s the larger-sized The Lodging Industry Investment Council (www.liic.ws) is the premier think tank in the hotel industry. Its members include a diverse mix of 70 inﬂuential leaders in the real-estate and ﬁnance ﬁelds. Membership is by invitation. Co-chairmen: Mike Cahill, president and founder, HREC—Hospitality Real Estate Counselors; Sean Hennessey, c.e.o., Lodging Investment Advisors, Jim Butler, partner, Jeffer Mangels Butler & Marmaro Mike Cahill Jim Butler Sean Hennessey deals—those at $100 million and above—that are requiring much more equity. “There’s a delay for the market to catch up,” added James Merkel, managing director, RockBridge Capital. “A lot of the new supply (coming into the market today) was capitalized a year ago.” Merkel said the interesting timeframe will be between the next six to 12 months, a period that lacks a lot of visibility. “There are a lot of opportunities out there, but the market is hard to predict where we’re going to be in six and 12 months,” he said. To make up for a sluggish economy domestically, Gilani said Marriott is focused on growth overseas, particularly in the Asia-Paciﬁc and Europe/Middle East regions. “Overall, I think the right deals will get done,” he said. “It falls back to sponsorship, location and brand. Sponsorship has got to have experience in the industry and in development.” Cahill added a silver lining, saying the slow market is providing opportunities for developers and buyers who have capital and can seek out good deals. “Smart money now is buying hotels if they have sellers that have realistically adjusted the pricing, that they aren’t thinking it’s ’07 pricing,” Cahill said. “Smart developers are building now because you want to be opening up as we come out of a recession.” jfreed@questex.com Accor Continued from page 1 The North American market is a key one for Accor’s short- and long-term growth, Poirot said. Worldwide, the company plans to add 200,000 guestrooms to its portfolio in the next ﬁve years. North America is expected to represent 12 percent, or about 24,000 rooms, ranking it third behind Europe (adding 62,000 rooms) and Asia (adding 44,000 rooms). Poirot said the company wants to grow Motel 6 signiﬁcantly and at the same time build the Soﬁtel brand through careful development in North America. As the company redeﬁnes Soﬁtel’s standards, it also has development plans here for the upscale business-focused Pullman brand, which launched last year. “The United States is priority No. 1,” said Christian Karaoglanian, Accor’s chief development ofﬁcer. company wants to open 12,000 properties in North America by 2010. The majority of those will be Motel 6. As of March, Accor reported 61.9 percent occupancy and a revenue-per-available-room drop of 1 percent during the ﬁrst quarter of 2007. Accor North America by the numbers Brand Motel 6 Studio 6 Novotel Soﬁtel Total No. of properties 915 47 8 10 980 No. of guestrooms 93,138 5,649 2,077 3,193 104,057 Soﬁtel Worldwide, Accor is focusing heavily on its branding message for Soﬁtel, segmenting its network of properties into the Soﬁtel Legends brand of unique, historic buildings, the So by Soﬁtel brand of boutique-style offerings and the classic Soﬁtel portfolio, which the company plans to trim and redeﬁne so the luxury message for the brand is clear. Poirot said the North American market is the key indicator to determine if the brand’s strategy to focus entirely on luxury is successful. So far so good, he said. “The launch of the ﬁve Soﬁtel properties [in New York, Philadelphia, Chicago, Washington and Montreal] has done a lot for the brand,” he said. Poirot said Soﬁtel executives particularly are proud of the Soﬁtel Los Angeles’ “rebirth,” as he referred to the property’s 2006 refurbishment that included guestroom and public space redesigns and the addition of several new food-and-beverage outlets. The L.A. property most likely will re- Source: Accor North America Motel 6 To boost its North American presence, Motel 6 unveiled its ﬁrst redesigned prototype in 12 years in March. “The strategy for North America is very simple,” Poirot said. “The market is oversaturated. Motel 6 is a leader here.” He said the ﬂag as a So by Soﬁtel property soon because it represents the stylish, boutique feel Accor wants to project with that sub-brand, Poirot said. As Accor adds properties to the Soﬁtel portfolio, 80- to 85-percent will be new builds, said Marc Brechignac, senior v.p. of development for Soﬁtel Worldwide. The brand works with carefully selected architects and designers to reinforce its positioning as luxury with French overtones “The ‘look’ of Soﬁtel will be carefully looked at and special to its particular city,” he said. “The Chicago Soﬁtel, for example, does not get mixed up in your mind as anything else.” Poirot reinforced the global impact Soﬁtel’s North American success has on the rest of the brand’s portfolio. “Historically, most Soﬁtels were in Europe. From a group standpoint, [the North American] footprint is fairly small with 10 properties, but the importance is disproportionate,” he said. “It’s difﬁcult to express how important these properties are.” Four years ago, Accor developed an asset-right strategy for real-estate development. Through ownership, management and franchising, the company is committed to smart development. Now it also employs a variable rent lease practice in Europe, and Poirot said the company plans to try that model in North America. Pullman As Accor tightens its Soﬁtel portfolio to include only those properties that meet the exact brand standards, Poirot said the company will reﬂag some current Soﬁtels as Pullman properties, even in the United States, where the Pullman name is not nearly as recognized as it is in Europe. Twelve Pullmans are open now in France, Germany, Belgium, Thailand and China. Positioned as an upscale offering catering to business and meeting travelers, Pullman is slated to have 300 hotels open by 2015. “In the U.S. we’re still considering which properties will be Pullmans,” Poirot said. sricca@questex.com http://www.liic.ws http://www.liic.ws http://HotelMotel.com

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - July 21, 2008

Contents Larkspur Hotels Branch Out with New Brand Starwood’s C.E.O. Maps Out Journey New Brand Leaders Share Hits, Misses Perspective Letters to the Editor Legal FAQ Training Trends Sales Clinic HotelWorld Update Trends & Stats Special Report: 2008 Construction Companies Survey Guest Column Events Technology: Telephones Hotel Operations: Building Exterior Design: Televisions Transactions Awards Hot Products: Mattresses Supplier News Ad/Edit Index Marketplace Classifieds Checking Out Hotel & Motel Management - July 21, 2008

Hotel & Motel Management - July 21, 2008

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