Articles Posted in Outlook and Trends

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15 October 2011

Hotel Lawyer from CMBS Special Servicer heaven with the latest insights from the Dallas Lenders Conference

For 11 years now, Steve Van and his team at Prism Hotels have held what is probably the best lender conference in the country. Attendance is by invitation only. The one-day program is attended by industry leaders and about 100 of the Who’s Who of the hotel lending world. If you are a special servicer, you want to be at this meeting. The convocation has swelled in size from about 35 at the first meeting, but Steve resists all the temptations to grow too large so that this remains an informal meeting place for serious dialog and candid discussion.

Generally, the conference delegates include the top people from the major special servicers, such as Midland Loan Services, C-III Asset Management, CW Capital, Berkadia Commercial Mortgage, ORIX Capital Markets, KeyBank Real Estate Capital, Bank of America and the like – all the people you would like to see but never find at the major investment conferences. The sessions are highly interactive, more akin to think tank sessions and sharing of experiences and concerns than the typical conference lecture format.

I was privileged to lead a panel of thought leaders on “Trends in Hotel Loan Sales,” and Guy Maisnik (my partner and vice chair of our Global Hospitality Group®) spoke on the panel “Special Servicers Survival Guide for Loan Defaults – CMBS 201: What has changed?”
Here are some highlights of the meeting that I thought were noteworthy . . .

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27 September 2011

Hotel Lawyers with some (very) good news.

Of course there are plenty of macro economic issues and industry challenges to worry about. (See It’s not just me. The market has changed.)

But there are also some things to feel good about. If you want to be gloomy, go read your newspaper. If you want to cheer up, keep reading.

Here are a few nuggets of information to brighten your day.

[The slides in this article are taken from presentations at The Lodging Conference in Phoenix by Mark Woodworth of PKF, and Vail Brown of Smith Travel research. We appreciate their permission to use their slides.]

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25 September 2011

Hotel lawyers: Are we at a turning point in the industry?

Our hotel lawyers were at The Lodging Conference in Phoenix last week, taking the measure of the hotel industry. It was pretty interesting. Some said August was a “turning point” and they were not referring to a good thing.

At the Hotel Law Blog, what happens in Phoenix does not stay in Phoenix. Here’s what we heard.

“It’s not just me. The market has changed in just the last 60 days!”

While many people at the Lodging Conference said recent market volatility had no impact on them, their transactions or their deals, this was clearly not the case for all.

A widely-held view was that it seems like someone hit the “PAUSE” button on hotel finance and purchase-sale transactions. Some fear a “reset” button may also have been tripped. The global market turmoil of the past 30-60 days triggered by the inability of our politicians to resolve deep U.S. budget issues, along with questions about political resolve by European governments to deal with their own problems continue to raise major issues.

And there are all the usual specters of big increases in taxes, continued high unemployment, sagging consumer confidence, rising labor costs, rampant inflation to deal with $14 trillion of debt, operating costs rising faster than RevPAR as well as war, plague and pestilence.

So here are some insights from industry leaders and vignettes JMBM’s hotel lawyers gathered at the Phoenix Lodging Conference. In many cases we have omitted the speaker’s names because I was not certain that the comments were intended for attribution.

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15 August 2011

Hotel Lawyer on brokers, agents fiduciary duty and charges of trust betrayed as laid out in the high-profile lawsuit of Host Hotels & Resorts against Robert T. Koger (personally) and his brokerage firm Molinaro Koger, Inc.

I was recently interviewed by Jason Freed of HotelNewsNow (a division of Smith Travel Research) about three high profile lawsuits in the hospitality industry. One of these cases was Host Hotels & Resorts v. Robert T. Koger. In this litigation, Host Hotels & Resorts sued a number of defendants, including Rob Koger and his firm, Molinaro Koger, for breach of fiduciary duties, breach of contract, fraud and other serious claims.

Lawsuits between sellers and brokers are not particularly common in the hospitality industry. And lawsuits alleging fraud are even less common.

One of the reasons I enjoy working in the hospitality industry is the optimism, openness and collegiality that exists throughout the hospitality community. Developers, owners, operators, lenders, brokers, lawyers, consultants, advisors, trade media — we all depend upon each other. Although I am a rigorous advocate for my client’s position in negotiations, there is an understanding, including with those on the “other side”, that we are working together for the success of making the deal or completing the project.

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05 June 2011

Flying en route from LA to New York for the NYU Hospitality Industry Investment Conference yesterday, I exchanged some emails with Michael Murray of the Mortgage Bankers Association. (I am a big fan of wi-fi on aircraft — no more downtime on those long flights!) He wanted my take on what’s ahead for the hotel industry and asked me the kind of questions that bankers ask — the ones that help you gauge risk and reward.

I told Mike that my view, whether cruising at 35,000 feet or with feet planted firmly on the ground, is clear: sunny skies ahead, with occasional clouds (and light showers), but no storms on the horizon as far as we can see.

Hotel industry fundamentals are improving, there is little new supply and there is virtually unlimited equity on the sidelines. Hotel values increased 10% to 15% in 2010 and prices are trending upward.

Here is how I see it now. I will let you know if anything I hear at NYU in the next couple days changes my view …

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01 June 2011

Debt is returning, equity is out looking, and we’ve passed the bottom of the trough. Why now is the time to purchase a hotel.

We promised to let you know when Hotel Business® published its coverage of its 2011 Executive Roundtable–Capital Ideas: Financing Solutions For Opportunistic Dealmakers that took place on May 2, 2011 in Los Angeles prior to Meet the Money®. The current issue of Hotel Business® just hit my mail box and the articles covering the Executive Roundtable and Meet the Money® provide some thoughtful reading.

If you do not know why now is the time to invest in a hotel, you will want to read these articles!

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17 May 2011

Hospitality Lawyers on the State of the Hotel Industry.

Mark Woodworth of PKF is one of my favorite industry experts when it comes to getting meaningful information and helpful forecasts. He lived up the highest expectations at JMBM’s recent Meet the Money® conference.

Here is his slide presentation where Mark addressed a lot of critical questions we all want the answers for, including:

  • Where are we in the hotel cycle?
  • What’s happening with corporate profits, job growth and lodging demand?
  • What’s the effect of the housing problem?
  • What is the forecast? (Good and getting better)
  • What’s the impact of oil prices on lodging demand?

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16 May 2011

Hotel Lawyers’ updates on capital and debt markets for hotels, transaction sales data and financings

David Loeb from RW Baird always provides such interesting hotel data. In his excellent presentation at Meet the Money®, he gave us the latest industry data showing:

  • How REITs have dominated the transaction market (more than 80% of the transactions year-to-date in 2011)
  • What’s happening in the debt markets now with yields going below 9%
  • How hotel stock investments have fared compared to other investments
  • What is happening with IPOs and IPO pipeline

And when you are studying his presentation slides, don’t stop at what looks like the end, because he has great stuff in his “Appendix: Transaction Tables.” As David said, think of this this as a “free bonus” with detailed information on:

  • Selected hotel sales data
  • Loan details on originations and refinancings
  • Equity raises

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10 May 2011

Hotel Lawyer with nuggets from JMBM’s Meet the Money® 2011

For all of our industry friends — whether or not you were able to attend Meet the Money® 2011 in Los Angeles last week — we will be posting on the Hotel Law Blog some of the invaluable information delivered by industry thought leaders at the conference. In the coming days and weeks, look for PowerPoint presentations, summaries of panel discussions and, of course, commentary. But today, we will whet your appetite with some sound bites — nuggets of insight, analysis and humor — from some of the best minds in the industry.

  • Who is financing?
  • When do we hit the peak?
  • Are market values running ahead of fundamentals?
  • How do you price deals today?

These are some of the questions that continued to surface through various panel discussions and hallway conversations during the conference. For some pertinent nuggets, read on.

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5 May 2011

Hotel Lawyer from Meet the Money® – Hotel industry think tank’s top 10 challenges for 2011
I am privileged to be one of the co-chairs of the Lodging Industry Investment Council (LIIC) along with Mike Cahill and Sean Hennessey. LIIC is the hotel industry “think tank” whose membership owns or operates many billions of hotel investments, and involves all aspects of the industry.

LIIC surveys its membership each year and first releases the results — The LIIC Top 10 — at JMBM’s annual Meet the Money® conference. Mike Cahill, president and founder of HREC – Hospitality Real Estate Counselors (www.hrec.com) compiled the survey and delivered its results to the 350 participants at the conference.

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Contact Information
Jim Butler, Chairman
Global Hospitality Group®
Jeffer Mangels Butler & Mitchell LLP
(310) 201-3526 • jbutler@jmbm.com
www.HotelLawyer.com

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