Hotel & Motel Management - October 15, 2007 - (Page 43)

www.HotelMotel.com/digital_edition HotelMotel.com | H&MM October 15, 2007 News 43 Lending Continued from page 1 projects. “There will be an effect, whether it is 30 or 60 or 90 days, while lenders are re-evaluating lending risks and pricing,” he said. “There will be some projects postponed. … It’s more an issue of delaying than canceling.” PWC did not change its supply change forecast for 2007. For 2008, it decreased its forecast of 2.1 percent change from prior year to 2.0 percent. Demand for 2008 was forecasted at a 1.7 percent increase as of August, and has been revised to 1.6 Hanson percent. PWC Leslie Ng, chief investment ofﬁcer at Interstate Hotels & Resorts in Arlington, Va., said there has been meaningful impact on the hotel industry, and he agrees that there is a pause in the lending community. “The pause comes with caveats,” he said. “It comes with tightening credit parameters. Lenders could just be waiting out the absorption of debt that needs to be sold. Hopefully it’s three to six months and not a year issue.” Ng said lenders are lowering the loan-to-value ratios and increasing the coverage ratio. “Perhaps the most important thing we found is that, for the moment, they’re focused on doing hotels with cash ﬂow as opposed to turnaround deals,” he said. Mike Patel, chairman and founder of Atlanta-based Haven Trust Bank and two smaller lending institutions, and chairman of Budgetel Franchise Systems in Atlanta, said there are many banks pulling programs, but his banks will continue to lend. He said they will be lending to more proven applicants, but will still have ﬁrsttime buyer programs. “[The credit crunch] is a good thing for my bank, but a bad thing for hoteliers,” Patel said from The Lodging Ng Conference INTERSTATE in September. Larger banks offering commercial mortgagebacked securities are becoming more reluctant to approve loans, so smaller banks are able to step up and ﬁll the demand with other ﬁnancing options, he said. Also in the thick of things at The Lodging Conference, Jeff McKee and Greg Morris, managing directors of Premier Capital Associates LLC in Bellevue, Wash., a nationally focused investment banking ﬁrm, said the financing climate will require companies such as theirs to educate borrowers about changes in the market that make transactions more complex. “We have to temper expectations on leverage levels and spreads,” Morris said. “It’s the ﬁrst real signiﬁcant change in the market in quite some time.” Under Construction InterContinental Hotels Group plans to build a new 135-room Hotel Indigo in the East Liberty area of Pittsburgh. Construction is expected to begin in second-quarter 2008 with an expected opening in fourth-quarter 2008. The property will be owned by Governors Hotel, under a license agreement with a company in the InterContinental Hotels Group. The good news Yields on hotel real-estate are still favorable, so people are still interested, Ng said. Compiled by Stacey Higgins, shiggins@questex.com Bill Reynolds, managing director of Annapolis, Md.-based Thayer Lodging Group, agreed. “Clearly there still is mon- lodging industry.” ey that needs to be invested,” he Reynolds said he’s still focused said. “The issue is that some lend- on company earnings. ers are [wondering], are they go“We can talk about [capitalizaing to lose money and what things tion] rates and interest rates, but are worth. The hotel world con- what really matters is, is the busitinues to be more attractive from a ness growing or not? You either get performance standpoint and that more bodies through the door or shouldn’t change.” get better rates while controlling McKee said borrowers should your expenses. It’s about producexpect spreads that are more con- ing a good bottom line. It’s worth a servative and more tralot more at whatever cap ditional underwriting. rate. Ideally, I wouldn’t They also should enlist have as many outside the help of experts where influences on profitnecessary through this ability, but it’s a healthy uncertain time. adjustment that will The slowdown in keep some inexperisupply growth also bodes enced investors out.” well for the industry. Hanson said PWC According to Han- Reynolds is looking at how son, “The cycles may THAYER changing consumer atbe exacerbated by the titude will affect travel. change in supply growth to the ex“Not all chain scale segments tent that this has a small dampen- will be affected equally,” he said. ing effect through a delay. It may “Those with the greatest share of help stock returns and increase price-sensitive consumer will be debt-service coverage ratios, which affected more.” is positive when lenders look at the shiggins@questex.com Each one comes with a full parking lot. U.S. lodging industry forecast Revised forecast Average daily rooms sold (in thousands) Percent change from prior year End of year supply (in thousands) End of year supply change from prior year 2,822 1.2% 4,472 1.9% 2007 Difference over Aug. forecast -2 -0.1% 0 0 Revised forecast 2,867 1.6% 4,563 2.0% 2008 Difference over Aug. forecast -5 -0.1% -3 -0.1% Call: 1-888-842-2942 Franchises available in the U.S. and Canada. Fax: 1-972-360-5567 franchisesales@accor-na.com accor-na.com 2007 revised forecast Average daily rate Occupancy RevPAR $103.33 63.3% $65.39 2007 difference over Aug. forecast -0.1 % 0.0 -0.1% 2007 percent change over year 5.7% (0.0) 5.6% Source: PricewaterhouseCoopers Individual results vary by hotel, market, and experience of operator. This is not an offer. An offer can be made only through an offering circular. MN REG F-5053 © Accor Franchising North America 4001 International Parkway Carrollton, TX 75007 CIRCLE NO. 101 http://www.HotelMotel.com/digital_edition http://HotelMotel.com http://accor-na.com http://accor-na.com

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - October 15, 2007

Hotel & Motel Management - October 15, 2007 Contents Concord Sets Goal to Double Portfolio Leaders: Budgetel Brand Off and Running Pension Funds Put More Capital Into Hotels Perspective Letter to the Editor At Your Risk Consultant's Corner Sales Clinic On Finance Guest Column Trends & Stats Industry Leaders Say Healthy Times Will Continue Eco-Concious Hotels Looks for Certification Events Removing Chemicals, Suds from Housekeeping Products Handhelds Help Track Safe Activity People on The Move Awards Transactions Supplier News Ad/Editorial Index Bath Trends Marketplace Classifieds Checking Out

Hotel & Motel Management - October 15, 2007

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.