Hotel & Motel Management - December 29, 2008 - (Page 36)

» BY EMILY H A NN A, ASSOCI AT E EDI TOR 2009 requires changes across the board that’s when we’re going to start to get a lot of action again, and that’s when the hotel industry is going to start to recover.” Until that point is identiﬁed, credit will remain hard to come by, therefore lowering the selling price of many properties and forcing buyers and sellers to revamp their tactics. The sellers who remain in the market for ’09, in general, are those who need to be there. “It’s not an opportune time to come to market unless you have to. What would make you? Maybe if you have a loan coming due and you weren’t able to pay off that loan,” Conti said. Niehaus agreed. “The people who are making the money are going to hold onto their assets because the values will drop off considerably in ’09. If they’re not losing money, then they’ll hope that the whole process is going to be improving by the end of next year and into 2010,” he said. Niehaus also said sellers who may have been holding out for a higher price early in 2008 may be forced to sell in 2009. “If the numbers are really soft during the winter, there’s going to be a number of people who, say, should have taken a $4.8 million offer in March of 2008 and were holding out for $5 million … and the revenues in the fourth quarter of ’08 and ﬁrst quarter of ’09 might now make their property worth $4 million,” Niehaus explained. “They’re going to now say, ‘The numbers have fallen so far that I need to get my property on the market or I can’t pay my debt.’” The holding of assets by some will change the brokerage landscape for 2009: Fewer quality properties will be up for sale and the number of buyers will lessen because funding is not readily available. “On the buyer side, the buyer’s going to have to be prepared to come with more cash,” Niehaus said. “They’ve been spoiled for the last 10 years of doing deals for 20 perSee Brokerage | page 42 THE PLASENCIA GROUP Large transactions still can close, especially with seller ﬁnancing, but are less frequent. The Plasencia Group closed on The Sagamore Resort in Bolton Landing, N.Y., [pictured] in September. line often touted through 2008 change in 2008 and will continue to need called for change in America. In adjustments in 2009. Many smaller deals are 2009, it seems change will come still able to close, Conti said, because they in more than just politics. The brokerage use regional and local lenders. “On the largfield is going to have to adjust its ways, er deals, you would need the national lendfrom buyers to sellers to brokers themselves. ers out there, and they have become more Because the industry was coming off selective and some of them have left the three or four stellar years of performance, marketplace.” 2008 transactions were expected to decrease This path will continue for transactions somewhat. But in August 2007, credit mar- in 2009; they will start slow and should kets tightened and made lenders pick up pace by mid-year, said scarce, if not unavailable, said RichH. Brandt Niehaus, president of ard Conti, president of The PlasenHuff, Niehaus & Associates and cia Group. Then, after the ﬁrst half the 2008 president of Hotel Broof 2008 ended, industry fundamenkers International. tals started to decline, he said. Conti said the turnaround will “Between those two things, we begin once a recovery time is idenhad a lot less sellers thinking this tiﬁed. “When everybody has a would be an opportune time to go consensus that we’ve reached our to market,” he said. bottom … and the economic indiConti Financing sources started to THE PLASENCIA GROUP cators show it’s going to come up, A 36 HOTEL & MOTEL MANAGEMENT | THE ADVISOR DECEMBER 2008 www.HotelMotel.com http://www.HotelMotel.com

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - December 29, 2008

Hotel & Management - December 29, 2008 Contents Viewpoint Outlook Purchasing Companies See Green and Save Purchasing Chart Designers Target Lifestyle, Lobbies and LEED Design Chart Construction Chart Construction Outlook Bleak Lending Chart Lenders Tighten Standards in Uncertain Market 2009 Requires Changes Across the Board Brokers Chart Brands Chart Building, Developing a Brand Tight Management Will Be Key in Downturn Management Chart Year of the Turtle: Slow, Steady Will Win Race Owners Chart Consumer Trends

Hotel & Motel Management - December 29, 2008

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