O’Hare Hotel Market – Media just leaves too much out – Webcast

Crain’s Chicago Business Webcast

What I have learned about interviews for different periodicals or websites which are not dedicated to lodging is that they select only comments which directly relate to their ultimate article or story, regardless whether other information which has been provided gives better color.  Now, not that we should expect anything different, but what else was said?

– The word fundamentals was mentioned a minimum of 5 times, yet was never referenced.  Much was said with regards to this industry not being one of a single market or even nationally.  The fundamentals of a hotel, the market, the brand, the room count, management, etc., is what determines success above all else.

– That two identical assets next to each other may perform differently due to management as we have always known, but in today’s environment, they may be able to survive vs not simply based on the last value and the existing debt.

– That with regards to the investment market, the reason for lack of deals to date has been lack of debt as much as anything else, and no one transaction/workout/etc is going to start a market, but rather distribution throughout the segments available to investors so as to set guidelines on different metrics.

– That it’s interesting 20% of all Commercial debt is CMBS, but more than half of the “distressed” assets, defined as minimum of 60 days delinquent in the Chicago area are assets with CMBS loans.  In other words the timing and availability of that debt is what is creating the gross majority of issues, not developing at the wrong time.

– That all these distressed assets don’t magically just come to market, but must first meet objectives of the lender or special servicer handling the loan, which takes time.

– That break-even used to be low 50%’s Occ, but with reduced rates and higher interest payments break-even has gone up, and while the average Occ% of all the distressed assets in the greater Chicago area remains above 60%, they no longer can break even, but would have had over-leverage not been so rampant.

– That the interest of the lenders and special servicers in specific Chicago issues such as the revamp of McPier and the subsequent renewal of Housewares shows they DO want to know about specific issues as well as fundamentals, but need it to be explained to them.  The same should be reported.

And much much more.  Nevertheless, it’s nice to have your opinion wanted.  It’s just too bad that this industry remains generalized all the time by not only media but often those inside it.

Beider

What to look for at NYU Hotel Inv Conf

(This post was stuck in unapproved land for some reason the last 24 hours)

So, I just touched down at LGA and am hustling over to my hotel to drop off my bags and then to the Marriott Marquis for some “action.”. For kicks, here is my visit in a nutshell even though it hasn’t started yet. Conference ends and sentiment is;

– Industry is poised for a recovery.
– Modest RevPAR gains for the year. The big groups will announce the changes to their annual forecasts.
– Transaction volume will heat up in the 2nd half of the year.
– There is TONS of equity on the sidelines waiting to be deployed into hotels.
– The debt markets are not allowing the equity to be deployed properly, and all cash deals are the easiest to get done
– There will be complaints that lenders and special servicers have not made properties available for sale enough, even though those complaining likely have not taken time to learn what a servicers objectives and responsibilities are.
– Very little of the above will be explained or justified well, though unemployment figures from the other day will come up at numerous general sessions and panel discussions.

I mention the above because it has all been said already numerous times recently at other events, in periodicals, etc. Folks repeat it as if it’s big news.

Best case scenario, we go to the meetings we have strategically set up and have meaningful and creative conversations which will lead to some good business.

Another hotel conference, lots more of the same. It’s what you make out of it, not what is provided for the app $2k.

New York, New York.

FYI, done from the iPad in the cab, so excuse any typos.

Beider