The Hotel Times - June 2008 - (Page 26) BROKERAGE OUTLOOK » BY ROBERT T. KOGER Bold counsel leads to top outcomes ª In great straits and when hope is small, the boldest counsels are the safest.º --Livy T Robert Koger is president of Molinaro Koger (MK), an international hotel real estate advisory, brokerage and capital markets firm founded in 1959. Headquartered in Washington, D.C., MK has offices in London, New York, Beijing, Shanghai, Mumbai, Atlanta, Chicago, Cincinnati, Dallas, Phoenix and Los Angeles. he current investment world is challenging. I don' t pretend that statement is an insight. It is a fact most of us have grasped but few have made peace with it. Our clients who have made peace with the current challenges of hospitality investment, both on the disposition and acquisition ends, no longer are stymied. As a result, they have executed savvy transactions in recent months. Their moves are all the more profitable for taking place when many are simply frozen (see Livy' s timeless words at left). How do you know if your investment counsel, as in your brokerage and advisory team, are doing their best for you right now? My clearest answer is that they encourage you to adequately assess where you are and where you want to head in terms of investments and ROI. At this point in the cycle, it appears safest to ride out uncertainty by holding still. This simply is not the case. The lodging industry tallied total industry profits of nearly $30 billion in 2007. Continued profit growth is predicted in 2008, albeit at a lesser rate. The U.S. lodging industry is strong and remains one of the best investment options for investors. Interest rates are at an historic low. As a result, it is difficult to know why those poised to dispose of assets should not do so, and why those in acquisition mode should not move forward. It is clear the transactional environment has changed. The window is temporarily closed for multibilliondollar corporate transactions. While super-sized transactions have slowed, the pace of individual sales remains robust, though at lower levels than the past two years. Transactions under $1 billion provide room for significant asset sales in 2008. How can you take advantage of the opportunities of the current market, assess your position and source attractive debt and equity? Ensure your counsel is bold, intelligent and meets the following criteria: Works on a global platform Specializes in hospitality assets Has specific market expertise Has key relationships with lenders, lodging companies and investors Although these are all important criteria, access via a global platform is crucial. The continued globalization of the hospitality industry indicates that brokers who do not have a global hospitality platform may have difficulty completing transactions. As capital markets shifted last year, we leveraged relationships with our European, Asian and Middle Eastern investors to facilitate favorable transactions for our clients. These investors are not experiencing the same credit issues and are able to take advantage of the favorable exchange rate when purchasing assets. Hotel assets will continue to be attractive to investors and pricing will remain strong as supply growth remains low. An international reach is crucial to obtaining optimum prices and terms for asset sales. The expanding scope of U.S. hospitality endeavors will increasingly depend on global relationships. Make sure your advisor is bold and has these capacities. hmm@questex.com 26 The Hotel Times June 2008 www.TheHotelTimes.com http://www.TheHotelTimes.com
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