Articles Posted in Meet the Money®

Published on:

15 May 2017

Meet the Money®2017 wrapped up last week at the Hyatt Regency LAX, and looks to be one of our most successful years yet! More than 350 hotel industry leaders gathered to hear from 130+ speakers who gave their expert perspectives on the current hospitality market, the national and global economy, and where trends might take us as we move towards 2018.

The conference will return May 7-9, 2018–Watch www.MeetTheMoney.com for program and registration information.

In the meantime, you can download all the presentations the conference completed last week from the RESOURCE CENTER at www.Hotel.Lawyer.com, or individual presentations as listed below:

 2017 LIIC Top Ten. Mike Cahill, CEO and Founder of Hospitality Real Estate Counselors (HREC) rounds up LIIC’s annual member survey results. What markets should you avoid? Where are we in the hotel real estate cycle? Challenges and trends are identified in the LIIC Top Ten for the current year.

Hotels Values & Cap Rates. Suzanne Mellen, Senior Managing Director of HVS, provides valuable data on historical hotel sales from 2006-2017 (total dollar volume and price per key), hotel transaction volume (year-over-year and by quarter), most active markets for the past 3 years, hottest urban markets, most notable sales, and what is happening to hotel cap rates. CONTINUE READING →

Published on:

10 May 2017

Hotel Real Estate: Forecasting Clear Skies with Some Clouds and Slightly Cooling Temperatures

For well over a decade, the members of the hotel industry’s preeminent think tank, “LIIC – The Lodging Industry Investment Council,” are annually surveyed to develop a list of the major hotel investment opportunities and challenges for the coming year.  This exhaustive survey results in the LIIC Top Ten; a highly regarded profile of investment sentiment and attitudes for the lodging industry for the forthcoming 12 months. Altogether, the members of LIIC represent direct acquisition and disposition control of well over $40 billion of lodging real estate.

Members are highly active and have the pulse of the market, with 45% of LIIC hotel investors having successfully purchased a hotel in the last 12 months and an additional 16% having made offers but not been the winner.  Moreover, 76% plan to sell a hotel over the next 24 months.

The hospitality industry’s most influential investors, lenders, corporate real estate executives, REIT’s, public hotel companies, brokers and significant lodging equity sources are represented on the Council.  LIIC serves as the leading industry think tank for the lodging business (www.liic.org).

Mike Cahill, LIIC co-chairman, produced this year’s survey (www.mikecahill.com).  Mr. Cahill is CEO and Founder of HREC – Hospitality Real Estate Counselors, a leading international hotel and casino brokerage and advisory firm (16 offices nationwide) specializing in lodging property sales, debt financing, consulting, appraisals and litigation support (www.hrec.com).  Nate Shartar and Alexander Cammarata, Associates in HREC’s Denver office, assisted throughout the process.

2017 Top Ten LIIC Survey Results

  1. Hotel Real Estate: Forecasting Clear Skies with Some Clouds and Slightly Cooling Temperatures: Overall, the 2017 LIIC Survey is more positive than 2016 and starkly different than the peak year survey in 2015.  Responses reveal a calmness, compared with wide spread nervousness in April 2016.  Chinese investment is expected (36%) to slow slightly and Brexit’s impact on US hotels is considered slight.  Private Equity followed by Listed REITs are predicted to dominate the purchase of Upscale to Luxury hotels; while, Regional Owner/Operators are projected to dominate the purchase of Economy to Upper Midscale hotels.
  2. Movement in the Hotel Real Estate Cycle?: Most investors (68%) believe we are still in the extra innings of the current cycle which began in 2009; however, an astute, highly intelligent minority (32%) believe we have begun a new cycle.  Projections for the US economy are positive, with 60% forecasting GDP growth averaging greater than 2% over the next 24 months.
  3. Asset Pricing Bid/Ask Settles, Values Flat to Maybe Increasing: Over the next 12 months, 54% project that lodging real estate values will be flat in comparison to 2016.  However, a sizable group (36%) forecast a slight increase in values (up to 5%).  Favorite investment target, Upper Upscale lodging properties.
  4. 2017’s Greatest Threats to Hotel Investment?: The top three threats on the horizon:
    • New Lodging Supply: 90% of LIIC members cited new hotel supply as the current and dominant top investment concern.  Hypocritically, 81% are building new lodging assets.
    • Increasing Interest Rates: With interest rates increasing gradually up to 100bps over the next 24 months, sellers need to understand the impact on asset pricing for hotels they are looking to sell.
    • Government Mandated Minimum Wage Increases: Investors (28%; down from last year) are threatened by government mandated minimum wage increases and the corresponding impact on hotel operating costs (74% anticipate a gradual negative impact over the next five years).
  5. Hotel Transaction Market Continues Slight Cooling: 52% of responders forecast the total dollar volume of U.S. hotel transactions in calendar 2017 will be down relative to year-end 2016 and 22% believe volume will be flat.  Similarly, 46% believe the number of assets sold to be down; while, 32% anticipate the number of assets sold to be flat.
  6. Hotel Debt Available, Yet Less Favorable: Hotel investors are “debt leery” causing 56% to seek refinancing of existing debt over the coming year even though 52% believe the optimum refinance window closed in the last six months.  Owners have more concern with interest rate increases on senior debt than lender’s available leverage percentages.
  7. Lodging Development Marches Along: Investor attitude stays positive on the concept of building new lodging properties.  As to developing hotels, 66% of LIIC responds “yes, if you are selective about product and markets”.  Respondents are putting their money behind their votes, with 81% of relevant LIIC members having new hotels actively under development.
  8. Want to Buy a Hotel?  Quantity and Quality:  Quantity:  42% of investors believe that a “below average quantity” of hotels are available for purchase closely followed by 44% at “average quantity.”  Quality (desirability to purchase):  52% believe the quality is average and 28% suggest negatively “slightly worse than 2016”.
  9. Markets NOT to Invest in?:  LIIC members were asked which of the top 25 markets they “would not consider buying a hotel” in: Houston, TX (64%), Nashville, TN (32%), Detroit, MI (28%), New York, NY (28%), St. Louis, MO-IL (28%)Sleeper – where to buy?  New Orleans! Not one vote against recorded.
  10. Marriott and Starwood Merger?  If you own a Starwood branded hotel, 36% surprisingly believe the value of Starwood lodging investments have increased specifically due to the merger.  On the other hand, the primary concern (22%) stressing hotel owners is decreasing negotiating leverage with Mega Marriott going forward.

CONTINUE READING →

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LOS ANGELES—The Meet the Money® 2017 conference will bring hospitality industry leaders together from May 8-10 in Los Angeles at the Hyatt Regency Hotel LAX. This marks the conference’s 27th year, where hotel owners, operators, developers, consultants, investors, brands, lenders and other capital providers will gather to get deals done and discuss and catch up on the latest issues and opportunities involving the hotel industry.

“This year’s conference is particularly important,” said Jim Butler, Chairman of JMBM’s Global Hospitality Group®. “The hospitality industry is at an interesting point in mid-2017. Intriguing opportunities will be available for the diligent and well-connected, but greater perils will also challenge investors. This conference will present many experts’ perspectives on what properties in which markets will thrive or perish. It is a great time to be an entrepreneur in the hotel industry.”

The theme this year is “Opportunity or Peril? Finding the right key to the right door.” Industry experts from top brands across the country will focus on the state of the industry and strategies that will aid in discovering opportunities and avoiding risks. Panelists will join discussions on successful development strategies, current capital markets, creative solutions for existing properties, foreign investment, and a range of other topics. The full conference program is now available online.

Since its inception in 1990, Meet the Money® has connected thousands of senior hotel financing experts, developers and hospitality insiders. Keynote speaker Richard K. Green, Ph.D., director of the University of Southern California Lusk Center for Real Estate, along with over 130 influential heavyweights in the industry have been assembled to provide insight on navigating the current market. Additional presentations will include a spotlight interview with Trump Hotel CEO Eric Danziger, and a CEO panel with top executives from Condor Hospitality Trust, Monday Properties, Interval International, CMB Regional Centers, and Aimbridge Hospitality. A full list of all conferences speakers can be found on the conference website.

About Meet the Money
For 27 years, Meet the Money® has provided a unique environment for forging relationships and gaining up-to-the-minute information about the world of hotel investment and finance. The conference is big enough to attract heavy hitters, but small enough to network with them. At Meet the Money®, there is time, atmosphere and availability to have meaningful meetings with deal-making potential. Register now at MeetTheMoney.com.

About Global Hospitality Group® of JMBM
The hospitality attorneys in the Global Hospitality Group® of Jeffer Mangels Butler & Mitchell LLP comprise the premier hospitality practice in a full-service law firm, and the most experienced legal and advisory team in the industry. Our team of hotel lawyers and business advisors has more than $71 billion in hotel transaction experience, involving more than 3,800 properties located around the globe, and providing one of the most extensive virtual data bases of market terms for deals and financings.

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The Lodging Industry Investment Council (LIIC) met in Los Angeles during the American Lodging Investment Summit 2017 and our friends from Hotel News Now (HNN) were on the scene.

Some of us were asked by HNN for our take on where the hospitality industry is headed in 2017 — including my friend and fellow LIIC board member, Mike Cahill, who will present the “LIIC Top Ten” hospitality issues of the year at the national hotel finance and investment conference, Meet the Money®, as he does every year.

To read my comments about why 2017 will be a year of change, as well as comments by my associate, Wei Deng, regarding the impact the possible depreciation of Chinese currency could have on the industry, see HNN’s coverage: LIIC: Hot takes on industry hot button issues.

I was also interviewed in the video accompanying the article, regarding predictions for M&A in 2017 (as were my colleagues Phil Ribolow of Deutsche Bank, Mike Cahill of Hospitality Real Estate Investors, Andrea Foster of Marcus Hotels, and Gary Gray 24/7Hotels). My comments in that video are as follows:

“It must have been about 20 years ago at one of our Meet The Money® conferences, an industry leader predicted that in the next few years there would be two hotel companies. I don’t remember which ones they were – I think it was Hilton and Marriott. Interestingly, the consolidation – the urge to merge – has been extremely strong. And while one can look at the brands and think that the smaller brands – a Hyatt, a Wyndham – might be more prone to being acquired. I’m not so sure that’s true. The scale of capital that is available really makes the entire hospitality industry subject to acquisition. The urge to merge is inevitable.” CONTINUE READING →

Published on:

20 October 2016

David Loeb, Senior Research Analyst at RW Baird, presented his research during the Meet the Money® 2017 planning meeting hosted recently during The Lodging Conference. His presentation covered factors currently impacting the hospitality industry, including the stock market, cap rate changes, hotel REITs, and new technologies.

I found David’s presentation very interesting and noted the following highlights:

  • Hotel supply and demand growth are nearly in equilibrium, and forecasts still call for continuing positive grow
  • Many investors are sitting on the sidelines waiting for the next downturn
  • Secondary and tertiary markets are outperforming
  • Select service continues to grow in popularity and is getting a premium valuation
  • In terms of market capitalization, the hotel industry is comprised of “Host and 14 dwarves,” but when compared to non-hotel REITs (such as retail industry giant Simon Property Group), it is more like 15 dwarves
  • Transparency in hotel pricing and technology are having a dramatic effect on the hotel industry

CONTINUE READING →

Published on:

15 October 2016

The hotel lawyers of JMBM’s Global Hospitality Group® recently hosted an event for hotel industry leaders held during the Phoenix Lodging Conference. The meeting was both a high level networking opportunity and a planning session for the Firm’s national hotel finance conference – Meet the Money® 2017, which will be held at the Hyatt Regency LAX, May 8-10, 2017.

For more information, visit www.MeetTheMoney.com.

U.S. Lodging Industry Analysis: Daniel Lesser, LW Hospitality Advisors

To help establish the setting, Daniel Lesser, President and CEO of LW Hospitality Advisors, gave a presentation on his view of the lodging strengths, weaknesses, opportunities and threats (or SWOT analysis).
Among the industry strengths and opportunities Dan discussed were the U.S. economy, strong inbound foreign tourism, CMBS maturities, and the rise of secondary markets. Some of the weaknesses and threats included slowing U.S. travel growth, changing regulations, the rising influence of labor unions, cyber security risks and travel industry disrupters such as Airbnb and HomeAway.

Dan’s presentation is below.  CONTINUE READING →

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Tye Turman, Senior VP of Lodging Development at Marriott, speaks with David Sudeck, senior member of JMBM’s Global Hospitality Group® at JMBM’s 2016 Meet the Money® – the national hotel finance and investment conference. They discuss what’s in Marriott’s pipeline, PIPs, adaptive reuse, and Marriott’s brands, including Moxy and AC.

A transcript follows the video. See other videos in this series on the Jeffer Mangels YouTube channel.

David Sudeck: I’m at the 26th annual Meet the Money® Conference. I’m here with Tye Turman, Senior VP at Marriott, and I wanted to talk to you about your experience here at the conference so far. First of all, I wanted to see if you’ve ever attended before.

Tye Turman: Actually, this is my first time, David. I’ve really been looking forward to this, I’ve heard about Meet the Money® for many years. I’ve always had schedule conflicts and unfortunately couldn’t make it, so it’s a real honor to be here.

David Sudeck: We love the fact that it’s a small, intimate conference; we hope you are able to get some real activity from the conference, make some good connections. So, wanted to talk about 2016, where you think we are in the cycle. Obviously, Marriott has been in the news in a very big way and I’m sure a lot of what’s in the press you can’t speak to at all, so I’ll avoid those questions. But in terms of the market cycle, what sort of initiatives are you undertaking in 2016 versus 2015, and where do you think we are in the market cycle? CONTINUE READING →

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Alice Gao, Senior VP of ICBC USA, speaks with Bob Braun, senior member of JMBM’s Global Hospitality Group® at JMBM’s 2016 Meet the Money® – the national hotel finance and investment conference. Alice explains the structure of ICBC USA, discusses interest rates, and Chinese immigrant investment in U.S. gateway cities.

A transcript follows the video. See other videos in this series on the Jeffer Mangels YouTube channel.

Bob Braun: I’m here with Alice Gao, who’s a Senior Vice President of ICBC USA. Alice, thank you very much for coming and spending a little time with us today.

Alice Gao: Thank you very much.

Bob Braun: Alice, I’d like to ask a few questions which I think you’re very suited to in your position with ICBC. One question I’d like to ask is, what kind of projects are the bank most interested in lending to these days? Are there things that attract you more than others, or are more interested in than others these days?

Alice Gao: Well, let me just start with a brief introduction of our bank. I’m very excited that as of December 2015, the bank continues to be ranked as the number one largest bank in the world by total assets of $3.6 trillion, and also as number one on tier one capital, about $215 billion. We are also ranked number one by net profit of $44 million. So, with that, in the U.S., we have four financial institutions. So, the four together provide a full array of products and services. The first financial institution is ICBC Financial Services: it’s a broker dealer of security services. And we also have ICBC Standard Bank, which is a financial market and commodity bank based in New York. We also have ICBC New York Branch, which is a wholesale bank of ICBC Group. And lastly we have ICBC USA, a Federal Charter full licensed bank, FDIC insured.

So, ICBC USA has thirteen branches and one service center. We have three branches in New York, ten branches in California, one service center in Seattle. Together with these four financial institutions, physical locations and e-banking platform, we offer not only traditional deposits and loan services, we also offer a variety of products such as cash management, trade finance, treasury and also foreign exchange. Our strongest point to distinguish us from others is we do offer variety of services of onshore and offshore renminbi products.

Bob Braun: So most of the lending that you would do on hotels is through ICBC?

Alice Gao: Most of the lending for hotels is through ICBC New York Branch and ICBC USA.

Bob Braun: And in terms of the type of lending you’re doing, does ICBC have any current priorities or any current trends that it sees? CONTINUE READING →

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Alan Reay, President of Atlas Hospitality Group, speaks with Robert Braun, senior member of JMBM’s Global Hospitality Group® at JMBM’s 2016 Meet the Money® – the national hotel finance and investment conference. They discuss the California hotel market including sales and purchases, pricing, RevPAR, financing, and the impact of the Marriott/Starwood merger and Airbnb.

A transcript follows the video. See other videos in this series on the Jeffer Mangels YouTube channel.

Bob Braun: I’m with Alan Reay of Atlas Hospitality. He’s the foremost hotel broker in California, I’d say. At least that’s what I tell my clients, and I’ve always been proved right. Alan, thanks very much for coming and talking to us today. I think you have your pulse on the market, certainly here in California, more than possibly anyone else. What do you see in the hotel market today? What kind of trends do you see?

Alan Reay: During the first quarter we’ve definitely seen a big drop off in sales in California. In the U.S., down 52%; in California, down 35%; that really has nothing to do with the economic fundamentals, because RevPARs are still increasing, profits are up and a lot of the numbers are positive throughout California. It has been a fundamental shift from a buyer’s sentiment in terms of how they’re looking at deals and how they’re pricing them. We had a lot of turmoil in the public markets, as you know, in the first few months of 2016, and a lot of REITs have pulled out of the market, and a lot of lenders have pulled out of the market. So that’s created a disconnect between what buyers and sellers expectations are on pricing, which in turn has created a big drop in hotel sales volume.

Bob Braun: Now do you think this creates an opportunity for people? Or is the lack of lending and the lack of interest something that’s just going to continue through the rest of the year? CONTINUE READING →

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Tom Corcoran, Chairman of the Board of FelCor Lodging Trust, speaks with David Sudeck, senior member of JMBM’s Global Hospitality Group® at JMBM’s 2016 Meet the Money® – the national hotel finance and investment conference. They discuss “rational debt,” redevelopment opportunities, and the evolution of FelCor.

A transcript follows the video. See other videos in this series on the Jeffer Mangels YouTube channel.

David Sudeck: I’m David Sudeck, I’m at the 26th annual Meet the Money® conference with Tom Corcoran, the founder of FelCor Lodging Trust. Thank you for joining us. You just got off your panel and you did a great job, so thank you for that. I wanted to hear about in this uncertain time, 2016, where you see us in the market at this point and how it may differ from 2015.

Tom Corcoran: Actually, I think it’s going to be a lot like ’15. I think ’16 and ’15 are going to be very similar. I think we’re going to continue to have positive RevPAR above the GDP and so I think it makes a lot of sense to me that the industry remains very strong; robust. There’s some clouds out there, people are trying to say there’s a storm coming, and I just don’t happen to believe there is. I think those clouds are artificially made up and aren’t really in the real world.

David Sudeck: My experience is some of our lender clients are pulling back in terms of the provisions, particularly of construction lending.

Tom Corcoran: Yeah, I think that’s probably good, I’m okay with that. When people go through getting nervous before things really are bad, it has the net effect of acting as a governor – which is why I call it a governor – because it kind of stops irrational lending. Most people believe supply is the worst enemy of the hotel industry and I would argue that it’s debt that creates the supply. The source, historically, of all the downturns has been where people have borrowed too much money – even in some of the worst cycles we’ve gone through – people had non-recourse, 100% financing. Then people can build hotels that make no rational, economic sense at all.

David Sudeck: So where do you see opportunities in this market given the lack of liquidity? I think that the number of hotel developers is going to shrink, supply will pull back to some extent. Do you see any specific opportunities in this marketplace? CONTINUE READING →