Hotel Law Blog

Author of www.HotelLawBlog.com
27 September 2007
Hotel Lawyer at the Phoenix Lodging Conference. The 13th edition of The Lodging Conference in Phoenix is very unique. For the first time in many years, there does NOT seem to be an overwhelming consensus about what is happening — at least as to the credit markets, and that is the big news here. Lodging fundamentals continue very strong, although occupancy may slip a small amount in 2008, and RevPAR growth will likely slow down (but it will continue to grow).

For many years there has been a clear and prevalent industry “mood” for hotel industry conferences (see for example, last year’s reports on www.HotelLawBlog.com on The Lodging Conference (“Ebullient Foreboding“), The January 2007 ALIS Conference, or even the NYU Conference in June 2007 (“forecast of ‘sunny skies’ for the hotel industry.”)

But this week’s conference has a fair number of knowledgeable people sounding like Chicken Little warning about the sky falling, and others claiming that we are just returning to a more normal scenario. The only clear consensus is that — for at least a while — this will NOT be “business as usual” for credit markets. Interest rates will be higher — at least 100 to 150 basis points. Loan to value (LTV) and debt service coverage (DSC) will be tougher — LTVs are likely to be more in the 65 – 75% range, and DSCs of 1.0 will more likely be 1.2 to 1.4. Construction lending will be very difficult to find in the near future, and underwriting will likely be much stricter. Here is what some industry leaders have to say.

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Author of www.HotelLawBlog.com
26 September 2007
Hotel Lawyer at the Phoenix Lodging Conference. Morris Lasky’s Phoenix Lodging Conference is always one of my favorite hotel gatherings each year, and last night the 13th edition of this event got underway with more than 1,400 people registered — up from 1,200 last year.

There is something about the beautiful setting at the Biltmore, the casual atmosphere (with many in shorts — or at least chinos — and short sleeve shirts) in the baking Arizona heat that fosters a comfortable, no-nonsense exchange of thoughts. But I do miss the early days when Morris “capped” attendance at 400, and you actually were able to move around and see all the people you wanted to in a more intimate environment. That is one unique compelling advantage that The Hotel Developers Conference™ and Meet the Money® still offer! Oh well, enough nostalgia. Here is my first take on mood of the Conference.

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Author of www.HotelLawBlog.com
16 July 2007
While I hear from readers on just about every posting I make on www.HotelLawBlog.com, there are some entries that generate much more traffic than usual, draw the most comments from readers, or just seem to stir the industry pot enough to keep my phone ringing. While some of these “top” stories are thoughts about emerging trends, like Green Hotel Development, and others are my take on timely news like the Ian Schrager and Bill Marriott “Marriage,” certain blog stories just seem to strike a chord with my readers.

I was able to select 25 such stories from every topic area categorized on the Blog. While it was a struggle to decide where the cutoff was for each topic, anyone who wants more on a particular subject can go to www.HotelLawBlog.com and search for all articles on the topic. To do that, just scroll down the right hand side and below the (free) subscription and RSS Feed buttons, is the Browser that enables you to sort by topic, date, key words, and so on.

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Author of www.HotelLawBlog.com
3 July 2007
Hotel Lawyer on THE BIGGEST HOTEL DEAL IN HISTORY. I almost entitled this blog: “‘Paris Hilton, “Get a driver!'”
Fresh out of a jail after serving 23 days of a 45-day jail sentence for probation violation following an embarrassing series of drunk driving and driving without a license offenses, the insolent (now reformed) Paris Hilton should just get a driver. She may not have to worry about the cost anymore! Her Granddaddy’s company has just been sold for $26 billion, and his share is $990 million!

REWIND. Instead, I decided to go with my more usual “hotel attorney and advisor” approach and will lead with this:

As if in a real world re-enactment of the nursery rhyme about 10 little Indians (or the 1945 Agatha Christie movie “Until there were none”*), Blackstone announced today that it is buying Hilton Hotels Corporation in a $26 billion deal. And in case you and Rip van Winkle have just awakened from your slumber, this deal is merely the latest in a long string of huge acquisitions by Blackstone approaching more yhan $100 billion in the last 5 years (including ESA/Extended Stay America for $8 billion, MeriStar for $2.6 billion, La Quinta for $3.4 billion, Wyndham for $3.2 billion, Boca Resorts for $1.25 billion) and by other private equity players such as Morgan Stanley which recently acquired CNL in a then-record-setting $6.6 billion deal only a few months ago.

What’s so important about this acquisition? It portends an unprecedented consolidation of the hospitality industry with potentially staggering consequences to hotel owners, guests, and other stakeholders in the hospitality industry. We will talk about that shortly. It also provides further confirmation of the prediction I made a number of months ago that “the entire industry is now on the block.” Let’s take a further look at the details and background.

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