Hotel & Motel Management - December 8, 2008 - (Page 18)

18 Consultant’s Corner IN THE details Making a deal work Steps in resort development Resort not always feasible Mixed-use sees success H&MM December 8, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Finding the solution to “upside-down” deals or most market feasibility consultants, our primary job is to tell clients whether the deal “works.” Here, in very simpliﬁed terms, is how it usually plays out in hotel and resort development—or at least how it did until recently: A client—typically a developer, lender or investor—is faced with evaluating F 1 By Gregory T. Bohan H&MM Columnist how feasible it is to develop a hotel or resort project and ask a consulting group for help; The consultant researches the market and prepares projections of performance down to net operating income over ﬁve to 10 years or more. consul3 Thethethe clitant or ent looks at net income levels projected and compares those income streams with development costs. If the rates of return are within an acceptable range, the project is considered feasible. If not, 2 4 Stop using your vacuum cleaner as CHANGES YOUR VACUUM FROM A BATTERING RAM a battering ram that dents furniture, scratches baseboards, bangs up doors and walls. And leads to bruising repair bills. Instead, tame the beast with a Soft Vac Protective Vacuum Cover. • Ends vacuum damage forever • Installs in seconds with Velcro tabs • Soft, durable cordoura fabric outside • High-density foam rubber inside • Eliminates costly repair bills • Extends vacuum cleaner life • Increases housekeeping productivity • There’s a Soft Vac model to fit any vacuum To learn more, contact your distributor, or call us at or visit INTO A GENTLE LAMB softvac.com. 800-866-7001, sometimes value engineering is called for, or it may just be time to look for the next project. Sounds relatively uncomplicated, right? And it was (sort of) until skyrocketing land and development costs and the recent credit meltdown changed the picture. In the current market, with somewhat surprising frequency, the most challenging feature of a resort project may be that the hotel component is not feasible. A common description of these deals is they are “upside down,” i.e., they do not have cash ﬂow, returns can’t cover expenses for adequate return or they just don’t work. So why are such developments still being built, and how are they being ﬁnanced? The answer is that new developments seldom comprise only “XYZ Resort,” but instead comprise the “XYZ Resort and Residences.” With all-in development costs for the hotel component rising (some approaching $1 million per key in development cost), developers have gone to a mixeduse model. Such a model works something like this: The hotel component cannot generate adequate cash ﬂow over its economic life to meet its debt obligations and provide a reasonable return on investment; Until recently, there were a large number of people interested in owning vacation or second-home real estate in the same resort locations; Attaching a luxury or ultraluxury brand name to a residential development adds cache to the development and a possible perceived value to the real estate; When this type of real estate is sold, the buyer almost always pays cash or ﬁnances it independently, generating cash ﬂow to the developer early on. Simple? Not really. But are the deals getting done? Absolutely—at least, until lately. It’s hard to tell what the next chapter will be, but it should make for interesting reading. hmm@questex.com Gregory T. Bohan is principal of Pinnacle Advisory Group in its South Florida ofﬁce and a member of the International Society of Hospitality Consultants. CIRCLE NO. 122 © 2006 SOFT VAC CORPORATION http://www.HotelMotel.com http://www.HotelMotel.com/digital_edition http://www.softvac.com http://www.softvac.com

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - December 8, 2008

Hotel & Motel Management - December 8, 2008 Contents Best Western Sets Spending Strategy Courtyard Turns 25, Unveils New Lobby New Division of MGM Goes Beyond Gaming Perspective Legal FAQ Marketing Matters Family Business On Finance AAHOA Update Satisfaction Trends HotelWorld Update Consultant’s Corner Trends & Stats IH/M&RS Editors’ Choice Award Winners Insurance Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - December 8, 2008

Hotel & Motel Management - December 8, 2008 - Hotel & Motel Management - December 8, 2008 (Page 1) Hotel & Motel Management - December 8, 2008 - Hotel & Motel Management - December 8, 2008 (Page 2) Hotel & Motel Management - December 8, 2008 - Contents (Page 3) Hotel & Motel Management - December 8, 2008 - New Division of MGM Goes Beyond Gaming (Page 4) Hotel & Motel Management - December 8, 2008 - New Division of MGM Goes Beyond Gaming (Page 5) Hotel & Motel Management - December 8, 2008 - Perspective (Page 6) Hotel & Motel Management - December 8, 2008 - Perspective (Page 7) Hotel & Motel Management - December 8, 2008 - Marketing Matters (Page 8) Hotel & Motel Management - December 8, 2008 - Marketing Matters (Page 9) Hotel & Motel Management - December 8, 2008 - Family Business (Page 10) Hotel & Motel Management - December 8, 2008 - Family Business (Page 11) Hotel & Motel Management - December 8, 2008 - On Finance (Page 12) Hotel & Motel Management - December 8, 2008 - On Finance (Page 13) Hotel & Motel Management - December 8, 2008 - AAHOA Update (Page 14) Hotel & Motel Management - December 8, 2008 - AAHOA Update (Page 15) Hotel & Motel Management - December 8, 2008 - Satisfaction Trends (Page 16) Hotel & Motel Management - December 8, 2008 - HotelWorld Update (Page 17) Hotel & Motel Management - December 8, 2008 - Consultant’s Corner (Page 18) Hotel & Motel Management - December 8, 2008 - Consultant’s Corner (Page 19) Hotel & Motel Management - December 8, 2008 - Consultant’s Corner (Page 20) Hotel & Motel Management - December 8, 2008 - Consultant’s Corner (Page 21) Hotel & Motel Management - December 8, 2008 - Trends & Stats (Page 22) Hotel & Motel Management - December 8, 2008 - Trends & Stats (Page 23) Hotel & Motel Management - December 8, 2008 - Trends & Stats (Page 24) Hotel & Motel Management - December 8, 2008 - Trends & Stats (Page 25) Hotel & Motel Management - December 8, 2008 - IH/M&RS Editors’ Choice Award Winners (Page 26) Hotel & Motel Management - December 8, 2008 - IH/M&RS Editors’ Choice Award Winners (Page 27) Hotel & Motel Management - December 8, 2008 - Insurance (Page 28) Hotel & Motel Management - December 8, 2008 - Insurance (Page 29) Hotel & Motel Management - December 8, 2008 - Insurance (Page 30) Hotel & Motel Management - December 8, 2008 - Insurance (Page 31) Hotel & Motel Management - December 8, 2008 - Insurance (Page 32) Hotel & Motel Management - December 8, 2008 - Insurance (Page 33) Hotel & Motel Management - December 8, 2008 - Ad/Editorial Index (Page 34) Hotel & Motel Management - December 8, 2008 - Marketplace (Page 35) Hotel & Motel Management - December 8, 2008 - Classifieds (Page 36) Hotel & Motel Management - December 8, 2008 - Classifieds (Page 37) Hotel & Motel Management - December 8, 2008 - Classifieds (Page 38) Hotel & Motel Management - December 8, 2008 - Classifieds (Page 39) Hotel & Motel Management - December 8, 2008 - Classifieds (Page 40) Hotel & Motel Management - December 8, 2008 - Classifieds (Page 41) Hotel & Motel Management - December 8, 2008 - Checking Out (Page 42) Hotel & Motel Management - December 8, 2008 - Checking Out (Page 43) Hotel & Motel Management - December 8, 2008 - Checking Out (Page 44) http://www.nxtbook.com/nxtbooks/questex/hmm_20091123http://www.nxtbook.com/nxtbooks/questex/hmm_20091109http://www.nxtbook.com/nxtbooks/questex/hmm_20091019http://www.nxtbook.com/nxtbooks/questex/hmm_200910http://www.nxtbook.com/nxtbooks/questex/hmm_200909http://www.nxtbook.com/nxtbooks/questex/hmm_200908http://www.nxtbook.com/nxtbooks/questex/hmm_200907http://www.nxtbook.com/nxtbooks/questex/hmm_20090615http://www.nxtbook.com/nxtbooks/questex/hmm_200906http://www.nxtbook.com/nxtbooks/questex/hmm_200906_voichttp://www.nxtbook.com/nxtbooks/questex/hmm_200905http://www.nxtbook.com/nxtbooks/questex/hmm_200904http://www.nxtbook.com/nxtbooks/questex/hmm_200903http://www.nxtbook.com/nxtbooks/questex/hmm_200902http://www.nxtbook.com/nxtbooks/questex/hmm011909http://www.nxtbook.com/nxtbooks/questex/hmm122908http://www.nxtbook.com/nxtbooks/questex/hmm120808http://www.nxtbook.com/nxtbooks/questex/hmm111708http://www.nxtbook.com/nxtbooks/questex/hmm110308http://www.nxtbook.com/nxtbooks/questex/hmm102008http://www.nxtbook.com/nxtbooks/questex/hmm100608http://www.nxtbook.com/nxtbooks/questex/hmm091508http://www.nxtbook.com/nxtbooks/questex/hmm090108http://www.nxtbook.com/nxtbooks/questex/hmm0808http://www.nxtbook.com/nxtbooks/questex/hmm072108-voichttp://www.nxtbook.com/nxtbooks/questex/hmm072108http://www.nxtbook.com/nxtbooks/questex/hmm070708http://www.nxtbook.com/nxtbooks/questex/hmm061608http://www.nxtbook.com/nxtbooks/questex/hmm060208http://www.nxtbook.com/nxtbooks/questex/hmm051908http://www.nxtbook.com/nxtbooks/questex/hmm050508http://www.nxtbook.com/nxtbooks/questex/hmm042108http://www.nxtbook.com/nxtbooks/questex/hmm040708http://www.nxtbook.com/nxtbooks/questex/hmm031708http://www.nxtbook.com/nxtbooks/questex/hmm030308http://www.nxtbook.com/nxtbooks/questex/hmm021808http://www.nxtbook.com/nxtbooks/questex/hmm020408http://www.nxtbook.com/nxtbooks/questex/hmm010708http://www.nxtbook.com/nxtbooks/questex/hmm122707http://www.nxtbook.com/nxtbooks/questex/hmm121007http://www.nxtbook.com/nxtbooks/questex/hmm111907http://www.nxtbook.com/nxtbooks/questex/hmm110507http://www.nxtbook.com/nxtbooks/questex/hmm101507http://www.nxtbook.com/nxtbooks/questex/hmm100107http://www.nxtbook.com/nxtbooks/questex/hmm091807http://www.nxtbook.com/nxtbooks/questex/hmm090307http://www.nxtbook.com/nxtbooks/questex/hmm080607http://www.nxtbook.com/nxtbooks/questex/hmm071607http://www.nxtbook.com/nxtbooks/questex/hmm070207http://www.nxtbook.com/nxtbooks/questex/hmm061807http://www.nxtbook.com/nxtbooks/questex/hmm060407http://www.nxtbook.com/nxtbooks/questex/hmm052107http://www.nxtbook.com/nxtbooks/questex/hmm050707http://www.nxtbook.com/nxtbooks/questex/hmm041607http://www.nxtbook.com/nxtbooks/questex/hmm040207http://www.nxtbook.com/nxtbooks/questex/hmm031907http://www.nxtbook.com/nxtbooks/questex/hmm030507http://www.nxtbook.com/nxtbooks/questex/hmm021907http://www.nxtbook.com/nxtbooks/questex/hmm020507http://www.nxtbook.com/nxtbooks/questex/hmm010807http://www.nxtbook.com/nxtbooks/questex/hmm121106http://www.nxtbook.com/nxtbooks/questex/hmm112006http://www.nxtbook.com/nxtbooks/questex/hmm110606http://www.nxtbook.com/nxtbooks/questex/hmm101606http://www.nxtbook.com/nxtbooks/questex/hmm-minibarhttp://www.nxtbook.com/nxtbooks/questex/hmm100206http://www.nxtbook.com/nxtbooks/questex/hmm091806http://www.nxtbook.com/nxtbooks/questex/hmm090406http://www.nxtbook.com/nxtbooks/questex/hmm080706http://www.nxtbook.com/nxtbooks/questex/hmm071706http://www.nxtbook.com/nxtbooks/questex/hmm070306http://www.nxtbook.com/nxtbooks/questex/hmm061906http://www.nxtbook.com/nxtbooks/questex/hmm060506http://www.nxtbook.com/nxtbooks/questex/hmm051506http://www.nxtbook.com/nxtbooks/questex/hmm041706http://www.nxtbook.com/nxtbooks/questex/hmm040306http://www.nxtbook.com/nxtbooks/questex/hmm032006http://www.nxtbook.com/nxtbooks/questex/hmm030606http://www.nxtbook.com/nxtbooks/questex/hmm022006http://www.nxtbook.com/nxtbooks/questex/hmm020206http://www.nxtbook.com/nxtbooks/questex/hmm010906http://www.nxtbookMEDIA.com

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