Articles Posted in Outlook and Trends

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riThe 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 →

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10 January 2017

I have often mentioned how much I enjoy working with all my friends and colleagues in the hospitality industry.  I am also fortunate to work with the talented, committed group of lawyers who comprise Global Hospitality Group®.  It is with pleasure that I let you know that one of our members, Brandon Chock, has been promoted to Partner at Jeffer Mangels Butler & Mitchell LLP (JMBM).

Brandon has a keen legal mind, more than 10 years’ experience in the world of real estate, finance and hospitality, an awesome work ethic and is an all-around pleasure to work with. I love having him on my team, and our clients love him on their team, too!

Brandon has played a key role in numerous hotel transactions, including: CONTINUE READING →

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31 December 2016

Yesterday, I had a delightful year-end lunch at the SoHo House with a remarkable man I have known and worked with about 25 years. I am very proud to call him my friend and include him amongst our “celebrity clients.”

When I first met this hotelier, he had recently left Four Seasons Newport Beach, and taken over the helm of the newly opened Beverly Hills Peninsula Hotel. With a hands-on intensity, he quickly turned around the financial performance at the hotel, earned the elusive 5 stars and 5 diamonds, and made the hotel the most profitable in The Peninsula Group with the highest guest return ratio in the market.

Ali Kasikci — a perfectionist’s never-ending efforts

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Yes, I am talking the legendary Ali V. Kasikci, named Independent Hotelier of the World in 2004 by HOTELS magazine and holder of countless industry awards for excellence.

From the Peninsula Group, Ali enhanced his already keen skills for hotel development, new hotel openings, and then building the team and instilling discipline to deliver unparalleled levels of service and profitability. Thus, Ali was a key member of the team that developed and launched the Montage Beverly Hills. Under his management, the new Montage (like the Peninsula before) also earned 5 stars and 5 diamonds in record time. CONTINUE READING →

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12 December 2016

EB-5 financing for developers extended. Obama signs “Continuing Resolution”

On December 9, 2016, President Obama signed the “Continuing Resolution” passed by Congress to extend funding of the federal government until April 28, 2017, by which time it is expected that Congress will have approved a budget for the full fiscal year.

EB-5 Regional Center program also extended to April 28, 2017

As with several prior budget extensions, the Continuing Resolution included an extension of the EB-5 program’s Regional Center provisions, validating expectations of industry experts.

This means that developers who followed our advice to “get in line” with their projects last fall (when some concerns over EB-5 renewal were raised) have either raised their EB-5 capital by now or should have plenty of time to do so before the current extension signed by President Obama runs out next April.

Why NOW may be the best time for developers to start EB-5 financing

Developers who followed our advice last fall have been well served. On August 16, 2016, we published a blog article entitled “Why NOW may be the best time for developers to start EB-5 financing.” We feel the same way today.

In our earlier article, we warned that there is always some uncertainty in predicting what Congress will do. However, all people that we know who are knowledgeable about the EB-5 program and the political environment believe that EB-5 will be renewed and continued in a viable form. Some developers are uncomfortable with the uncertainty created by short-term legislative sunsets on the extensions, and on accepting predictions that Congress will continue the program we have maintained since 1992 — almost 25 years. These developers want to wait until everything has settled down and has more certainty.

We believe the “wait and see” approach is a mistake for many developers — particularly those who are ready to start construction now. Here is why: CONTINUE READING →

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12 December 2016

I was recently interviewed by GlobeSt.com to discuss Chinese investment in the United States, including why the US is an attractive market for Chinese dollars, how it helps the US economy, and what it means for the Chinese market. Some selected excerpts from our conversation are below.

The driving factors behind Chinese foreign investment in the United States:

Chinese investors will deploy a record $212.7 billion in investments outside China. This trend is driven by a number of factors: Chinese real estate and stock market bubbles are bursting; The Chinese economy is slowing down so foreign investment (as in the US) are more attractive; The yuan has been depreciating against the dollar, making US dollar-denominated investments more attractive. Many Chinese investors, ranging from very wealthy individuals to insurance companies, find themselves with significant amounts of cash that need to be deployed into large, high-yielding investments. US commercial real estate is one of the few markets and asset types that can meet these requirements (large, high-yielding).

Chinese foreign investment has been encouraged by the Chinese government for building “soft power,” which is building the image of China and expanding its influence. Finally, many Chinese investors see synergies for using their foreign investment to take advantage of the Chinese market. Chinese travelers are expected to spend more than $72 billion at home and abroad in 2016. So everything related to travel, tourism, lodging, and entertainment plays into this growing market.

CONTINUE READING →

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10 November 2016

Global Hospitality Group® survey results: What does all the recent consolidation in the hotel industry mean to different stakeholders?

Marriott closed its acquisition of Starwood on September 23, 2016, following Accor’s closing of its acquisition of Fairmont/Raffles on July 12, 2016. Other consolidations may already be underway. In any event, most of us in the hotel industry expect some very important consequences to result from such transactions.

The hotel lawyers at JMBM’s Global Hospitality Group® thought it would be interesting to gather the views of various industry stakeholders as to the likely impact of these mergers. So just prior to the closing of the Marriott-Starwood deal, we prepared a short survey and reached out to our industry friends and colleagues, as well as readers of HotelLawBlog.com.

The survey results are in and counted! Here they are, along with a few comments.

Impact of hotel mergers on your business CONTINUE READING →

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7 November 2016

Hotel Lawyer on multi-branded hotels.

Hotels with more than one brand are increasingly common, but it wasn’t always so. Although some compelling advantages are driving this trend in many situations, developers and owners should weigh the advantages against other considerations.

My partner Bob Braun is a senior member of our Global Hospitality Group® and has experience with many hundreds of hotel management and franchise agreements. Bob is also co-author of the Hotel Management Agreement & Franchise Agreement Handbook (3rd edition), and has first-hand experience with branding and management for every major traditional hotel brand, including a number of multi-branded properties. Today he explores the phenomenon in greater detail.

Dual-branded & multi-branded hotels:
Opportunities and challenges
by
Bob Braun, Hotel Lawyer

The trend of dual-branded and multi-branded hotels

Over the past few years, the popularity of multi-branded properties has exploded. Less than a decade ago, a dual-branded hotel was an oddity. Then dual branding became more common, and some properties began to use more than two brands, so “multi-branding” was born in the hotel industry. In the early days, multi-branding resulted from unique circumstances. Today, it is driven by a number of factors discussed below, and there are nearly 100 properties with multiple brands and nearly that many again in construction. CONTINUE READING →

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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 →

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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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Most of the people we talk to in the hotel industry believe that consolidations, such as the recent Marriott-Starwood and Accor-Fairmont mergers, will have a big effect on their own hotel investments and other stakeholders in the hotel industry.

JMBM’s Global Hospitality Group® would like to know what you think about these events. Please click on the link below to tell us how these mergers will impact your business with this 6-question survey that should take you less than 3 minutes to complete.

Click here to take our survey.

We will share the survey results (on an anonymous and aggregated basis only) with everyone who completes the survey. The results should be interesting . . .