Happy Holidays to PLA twitter followers and Blog readers, check out the link to, “Why is finance so complex”
http://www.interfluidity.com/v2/2669.html
It really makes you think about our industry and how much of success is ‘individually driven’ versus ‘timing with Momentum’. Thoughts? Should we incorporate momentum into our pro-forma analysis for buyers? Post and let me know.
Sanjeev Misra
Email
There is no news today. Not literally, but as I ponder the question, to blog or not to blog (I know the answer is to blog, just need to find the time), I’m realizing that there is something I did not do that I should have, and today is a perfect time to take care of it. It’s not news, but it’s important.
In the business world we are blessed when we develop good relationships with the people that we do business with. We are further blessed when we develop good relationships with the people we actually work with. So as Thanksgiving rolled by, I did nothing, no blog, no tweet, no update on LinkedIn, etc. about the fact that I have obscene amounts of gratitude for the outstanding relationships that I have with my teammates at Paramount. There is not a PLA team member I do not consider a friend unless they are so new I haven’t met them yet (very new, I look forward to meeting you next week btw). In Chicago specifically, I can honestly say I know each PLA Chicago team member knows how I feel about them, as in how much I care about them as individuals, and in return I know how much they care about me.
We work hard, we debate, we can’t always act like we’re all best friends, that wouldn’t be productive. We have to teach and learn from each other which as a father I know is not human nature. Wanting to learn I believe is a skill, so sometimes the teaching and learning is done reluctantly.
We work on extensive projects we can’t or won’t talk about or do press on because we use the term “stealth” so often lately and maintain our ethical standards of confidentiality and respect. Even though this is our livelihood and we are compensated, I’m sure there is some frustration that we don’t get to stroke our ego a little bit. Until the work is complete however, or in some cases even after that point, we won’t let anyone know. I’m sure a part of each one of us wants to. We may celebrate with a bottle or Crown and a diet coke for me however.
Which leads me to my thoughts today. So it isn’t always peaches working with your colleagues. However, there are times to be serious and get down to business (like when I’m done writing this for example, which is completely spur of the moment), and there are times to relax, have fun and enjoy the things we have that are taken for granted even for one minute too long. I didn’t give thanks to the PLA team on Thanksgiving. Tonight however as we have our Chicago team holiday event, I will be truly grateful and thankful for each and every person that is there and that is not, who they are, what they have done and what I know they want for themselves and for this group of misfits, who somehow find ourselves right where we wanted to be.
Lots to be grateful for at the office? Since home is where the heart is, life is good.
Thx PLA.
Who will own hotels that the traveling public stays in moving forward?
I think about this question a lot. Things have certainly changed in the 20 years I have been involved in the industry, and I suspect they will change even more over the next few years.
From what I learned in hotel school, the rules of the trade started with innkeepers laws in the United Kingdom over 500 years ago. I personally started my romantic desire to own, operate, broker and consult on hotels when I saw the musical Les Miserables in my early teen years. There is a song called, “Master of the House”, that details the daily happenings at the Inn and how the Innkeeper manages all the daily chaos. That Innkeeper had revenue management perfected! The song shares his revenue secrets, here is an excerpt:
Charge ‘em for the lice, extra for the mice
Two percent for looking in the mirror twice
Here a little slice, there a little cut
Three percent for sleeping with the window shut
When it comes to fixing prices
There are a lot of tricks he knows
How it all increases, all them bits and pieces
Jesus! It’s amazing how it grows!
So I am digressing a little bit with my fond memories, but it does lead me to my main thought. I wonder if the day and age of the private hotel owner that is actively engaged in the operation of the hotel is slowing exiting stage right. This has been a function of bigger pockets of money (this would be REITs, Private Funds and Institutional Investors) becoming more comfortable with owning hotels.
The thought for the last decade has been that Hotels are Good Real Estate. The reality is and has always been that Hotels are an Operating Business. I thought that the institutional investors figured that out when our industry took a nose-dive at the end of 2008. We have now seen the largest volume of hotel assets in default with their lenders and in special servicing than ever before. Will this deter big money from our industry or serve as a light of opportunity to find undervalued distressed hotels? Only time will tell.
If we look at 2010, private owners were the biggest net sellers, unloading $1.9B of hotel assets, while public companies and REITs were the biggest buyers, with acquisitions of over $2B. Lenders were the next largest buyers of hotel assets with $1.8B in acquisitions (this is really net change to holdings). You could say that Lenders are the ‘involuntary owners’ today and it will be curious where these assets end up.
One might say that the private owner will always have a place because larger investors do not pursue smaller hotel ownership or investment in markets outside the top 25 MSAs. So does that mean that the chance to run into a hotel owner at an actual hotel will only occur at your highway exit hotel or in places like Flint, Cleveland, Des Moines and Greenville? (I have no idea why I listed those places, consider it a random selection of where institutional hotel players don’t want to invest)
So these are my rambling thoughts tonight and I would be interested to see people post comments on who they think will be the most active hotel owners in the future.
Sanjeev Misra
Welcoming Dave Marta to the PLA team in Chicago, adding a wealth of Capital Markets knowledge and relationships, as well as a desire to be a broker in the manner we see brokerage in today’s environment, pure advocacy and unbeatable success. Welcome Dave, we’ll send press over the next couple weeks. We will be redoing our blog site and social media distribution again also, so bear with us, but there will be lots to discuss this year, and we feel it’s important to deliver messages and thoughts that may provide value to our clients and the rest of the industry when applicable.
This morning, Bisnow hosted a real estate capital markets gathering in Chicago with both debt and equity panels.
Here are a few main points I’d like to share with you:
What do you think? I would like to hear your take on this. You can also contact me directly via email.
