The Hotel Times - March 2008 - (Page 32)

REAL-ESTATE UPDATE Travelers are keeping hotels full, and the rates are still solid. Market snapshot Apartment Hotel Industrial Ofﬁce Retail 3Q total returns 2.93% 4.41% 3.19% 4.76% 2.41% 4Q total returns 1.85% 4.03% 2.64% 3.82% 3.91% “ Although the hotel segment may be the last to feel the downturn in the market, it is still going to be impacted. There are many problems that will influence the future. Total return: Appreciation (or depreciation), realized capital gain (or loss) and income. It is computed by adding the income return and capital appreciation return on a quarterly basis. Source: National Council of Real Estate Investment Fiduciaries ” ROBERT N. GOLDSTEIN, PRESIDENT AND CHIEF EXECUTIVE OF HOSPITALITY CONSULTANTS Continued from page 31 “The performance of the hotel sector has done better overall. We have not seen quite the downturn that some of the other sectors have been experiencing. The first to be hit was retail, and that does have a trickle-down effect. Industrial and office segments will be impacted next.” Goldstein said that when the retail sector starts suffering, the warehousing, industrial business and office sectors will be next in line. “Some investors are assuming the end of the great hotel run has come, but there really is no evidence of that,” said Douglas Poutasse, executive director, National Council of Real Estate Investment Fiduciaries. “The other asset classes seem to get the benefit of the doubt, but hotels try to make their money early in the cycle, and as soon as anything goes wrong in the economy, they turn against the hotel industry. “That is where they are now. They are turning against it because of the economy, but travelers are keeping the hotels full and the rates are still solid,” Poutasse said. “ADR movement is not going to happen unless you have several months of weak occupancy performance. We don’t see any evidence of that yet.” The knock on hotels So what makes the hotel industry different, and why should it be viewed differently than other sectors by the lending and investment communities? “The hospitality sector is completely different from the other sectors from an economic standpoint,” Goldstein said. “The hotel business is operationally intensive and you have to have good operators. It’s really a mixing of multihousing ownership with commercial property ownership. Their issues and concerns are different, which is why it is last to feel the effects of some of the economic issues that we are all facing now.” However, it is also those differences that sometimes make the lending and investment communities more jumpy. There really are no lease agreements in the hotel industry like in the commercial and retail segments, which would somewhat guarantee income to the property owner and safeguard him or her, to a certain extent, during a period of economic downturn. On “ ADR movement is not going to happen unless you have several months of weak occupancy performance. We don’t see any evidence of that yet. DOUGLAS POUTASSE, EXECUTIVE DIRECTOR OF THE NATIONAL COUNCIL OF REAL ESTATE INVESTMENT FIDUCIARIES ” 32 The Hotel Times March 2008 www.TheHotelTimes.com http://www.TheHotelTimes.com

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The Hotel Times - March 2008 Business Outlook Editorial Outlook Contents Conference Preview Capital Outlook What's Driving Growth? European Outlook Development Outlook Fractional Outlook Branding Source List Insurance Outlook Brokers Update Brokerage Outlook Lodging's Balancing Act Transactional Facts Lending Outlook Lenders Source List In Closing

The Hotel Times - March 2008

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