 Lesser CBRE |
Las Vegas–Daniel Lesser, senior managing director at CB Richard Ellis, borrowed a quote from Warren Buffet to sum up the vibe at Meet the Money 2008. Lesser was addressing the current economy and its effects on buyers' hesitance within the lodging industry:
"When everyone is being greedy, be fearful. When everyone is being fearful, be greedy," he said.
 Butler JEFFER MANGELS BUTLER & MARMARO |
Lesser, addressing nearly 400 hoteliers during JMBM's annual Meet the Money hotel financing conference in May at the Green Valley Ranch Resort in Las Vegas, Nev., was optimistic about the "continued, albeit slower," growth within the lodging industry. He told hoteliers that 2008 is a great time to grow their portfolios.
"2008 is a terrific time to buy U.S. hotel assets," Lesser said. "There is money out there. This perception that there is no debt out there, it's a flawed perception. The leverage that existed before the peak is not out there, but there is really lots of 60-percent to 70-percent lenders out there."
The mere fact that Jim Butler, chairman of Jeffer Mangels Butler & Marmaro's Global Hospitality Group, was able to put together this conference during times of uncertainty proved there are financial organizations ready and willing to deal in hotel capital.
 Woodworth PKF HOSPITALITY |
"These are the people who are telling us they're here and they're providing capital for the industry now," Butler said.
 Bowers STR |
Meet the Money included the traditional industry update, and Smith Travel Research's senior v.p. Bobby Bowers analyzed supply and demand predictions for the remainder of the year. Bowers predicted that many flash-in-the-pan development projects will soon drop out of the pipeline because of a lack of funding and therefore room growth—or supply—will not be off the charts.
"Obviously a slower economy means a slower room demand growth and we'll have to see how the economy plays out for the balance of the year," he said. "But a lot of the data that we've looked at up until now [shows] that the top markets will probably outperform some of the secondary and tertiary markets."
Bowers suggested advances in revenue management, including managing booking at third-party Web sites, will help hoteliers ride out the current downturn better than in 2001.
 Show me the money |
Mark Woodworth, president of PKF Hospitality Research, said the beginning of 2010 is when the key industry numbers—supply/demand and average daily rate—will start to look significantly positive again.
"What we see is a very, very mild downturn relative to what we saw during the last two economic recessions," Woodworth said. "While the economy might be in a recession, the lodging industry certainly is not."
One Meet the Money panel, "Who's funding now?" featured six representatives from financial organizations who said their companies are actively lending and discussed what type of projects they are targeting.
The consensus was that debt today is more expensive than it was during the peak, but that isn't necessarily a bad thing. Only borrowers with a solid plan will do the extra work to find the capital, said Jonathan Falik, c.e.o., JF Capital Advisors.
As far as new-build projects, lenders were nearly as optimistic, echoing the statement that more equity will be needed to find construction loans.
"They must have a significant portion of the capital stack, and if they can get the flag to put in some skin as well, that essentially puts us over the hump right now," said Jed Richardson, director, Scotia Capital.
