It's no secret that strong companies with longevity often are born during a downturn, when owners and entrepreneurs strike while the iron is hot, acquiring assets at low cost, and at just the right time to build value.
Judging by some conversations I had at last week's Lodging Conference, the hotel industry is inching closer to that sweet spot, where acquisitions will start to make sense.
We have barely begun to see the wave of distressed hotel assets that will come to market, that's for sure. But what's piquing our interest this week here at Hotel & Motel Management is the chatter about distressed hotel brands--what they are, and who might be in a position to pick them up.
In a conversation with the always-talkative Steve Joyce last week, the Choice Hotels CEO said Choice "is interested in expanding." Expanding how, Steve? "We would really like to be in the full-service segment," he said.
With a portfolio that is two-thirds leisure focused, Joyce said the time is right. "Our view is, now is our time," he said. "There's never going to be a better set of circumstances."
And what about this article published yesterday at Bloomberg.com: "Wyndham May Buy Hotel Brands, Competitors' Operations"? Since Eric Danziger came on board, building a management team has been a huge focus for the brand, and now that those people seem to be in place, the time might be right for Wyndham, too.
The question remains then--what brands are ripe for a sale? Gossipping about brands is risky business that we don't like to delve into too often without cold, hard proof. But it's no secret that Hilton is in the middle of some brand issues these days, what with the demise of Denizen before it began (and the resulting legal chaos). The company's renaming and rebranding initiatives hint at the possibility of future brand family changes and seem like a step in the right direction to built more brand clarity. We'll see if Hilton's latest marketing and executive changes translate to a tightening of the portfolio down the road.
And what about Red Roof Inn? The Columbus, Ohio-based chain began defaulting on its mortgage in recent months (read an article on BloggingStocks.com here) to the tune of more than $350 million in mortgage payments.
My knowledge of hotel foreclosure issues grows every day, but what I know is the mere tip of the iceberg. Here's the point in the blog where I'll point you to Steve Van's wonderful Hotel Default Blog. If you are an owner, operator or developer and you haven't bookmarked this site, do it now. While you're at it, here is Jim Butler's take on the new CMBS rules--another hot topic last week in Phoenix. (Oh yeah--if you haven't bookmarked Jim's Hotel Law Blog, you're missing another regular dose of freebie education. Commercial over.)
Wait, one more commercial: Find out more about dealing with distressed hotel assets at the upcoming Distressed Hotel Summit, produced by the HotelWorld Network and taking place Oct. 12-13 in Washington, D.C.
