An investment in a full service hotel can easily exceed tens of millions of dollars. A sound investment, well-timed, can produce returns that are among the best in commercial real estate. However, a poor investment can set the buyer back for years to come. While no one can predict the future, a thorough analysis of prospective investments is fundamental to successful investments.
In recognition of our leadership position in this area, Lodging Advisors was asked to contribute a chapter to Hotel Investments: Issues and Perspectives, 3rd edition, published by the American Hotel & Lodging Association. Lodging Advisors also regularly presents one of NYU’s most popular seminars in its continuing real estate education program, Hotels as Real Estate Investments.
Recent acquisition Support Services:
- Lodging Advisors assisted a leading pension fund advisor with the acquisition of three boutique hotels located throughout the United States
A testament to our strong client relationships, many of our clients have asked us to assist them with the oversight of assets initial acquisition services are completed. Many of our clients are astute real estate investors but not focused so deeply the hospitality sector to support a dedicated hotel asset management team. Lodging Advisors is prepared to take the lead as the owner’s advocate for the property, or work in the background supporting our clients’ internal asset management teams. Either way, Lodging Advisors’ goal is to focus hotel management on those actions which best enable the property to achieve ownership’s investment goals. Because a hotel manager generally has great control over earnings but no stake in the ownership, a high level of vigilance is required in order to ensure that ownership’s goals are management’s highest priority.
In recognition of our leadership position in this area, Lodging Advisors was asked to contribute a chapter to Hotel Asset Management, 2nd edition, published by the American Hotel & Lodging Association published in 2010.
Recent Asset Management Assignments
- Portfolio of five Hilton hotels
- Upscale boutique in Denver
Where an ongoing asset management role is not warranted, Lodging Advisors is often called to perform operational analyses. In addition to a college degrees in hotel administration, our team has day-to-day operations experience with firms such as Marriott, Disney, Intercontinental Hotels, and numerous fine-dining restaurants that provide a wealth of real-world perspective on operating issues and opportunities. Because of the complexities of the hotel business, many general real estate investors can benefit from our deep operational experience.
Recent operational consulting Experience
- Lodging Advisors assisted a trade association on a variety of issues including labor negotiations, property tax relief, and transient occupancy tax issues
- Lodging Advisors estimated the financial benefits of complexing two upscale hotels into one operation.
Distressed Asset Support, Workouts & Restructurings
Hotel operating profits are often split between numerous parties, including the manager, franchisor, lender, investors, and managing owner. Because these parties receive income in varying orders of hierarchies, workouts and restructurings of hotel investments are fraught with many potential challenges. Our firm has extensive experience in dealing with all parties to a transaction, and our recognized authority assures our clients a respected place at the negotiating table.
Lodging Advisors has been retained as a hotel expert as called for in many CMBS pooling & servicing agreements in situations where the debt service coverage of hotels has eroded to a threatening level. Our principals prepared, at the request of the American Hotel & Lodging Association, the Lodging Industry Mortgage Performance Report. We have also spoken at a CMBS conference hosted by Fitch Rating Agency.
Recent Distressed Asset Engagements:
- We evaluated a number of hotel loan portfolios for lenders to assist in restructuring loans including Credit Lyonnais, CS First Boston, Aegon USA and Nomura.
- We assisted Motels of America and Shilo Inns in debt restructurings. Motels of America ultimately filed for bankruptcy and Sean Hennessey was the hotel expert in the bankruptcy proceeding.
- Sean represented Teachers Insurance where it was an investor in a tranche of a hotel CMBS investment.
- We worked with ING Clarion on a restructuring of a portfolio of 50 Fairfield Inns for which ING was the special servicer.
- We are currently supporting Appolo Real Estate in its efforts to restructure debt on a portfolio of five hotels.
- We have the ability to act as a fiduciary on our clients' behalf. Cheryl Boyer has served in this capacity before, most notably on behalf of UBS and the US Marshall’s office related to a hotel that was the subject of extensive fraud. We are not brokers and would not have any conflicts in this regard.
For many years, Lodging Advisors has assisted clients with evaluating hotel developments. Our services go way beyond the "feasibility" analysis offered by many firms. We often work with developers at the earliest stages of a development, providing insights into market positioning, development density, facility programming, and complementary amenities and land uses. We are often asked to develop financial models that codify the developers vision and market opportunity.
Recent Development assistance Engagements:
- Lodging Advisors was retained by a bidder to assist with its plans to redevelop New York City’s west side rail yards, in what was envisioned to be one of the largest development projects in United States history. Our firm provided a complete analysis of three hotels programmed for the development and provided testimony to city officials.
Beginning with a hotel foreclosure in 1992, Lodging Advisors’ principals have been involved in some of the hotel industry’s most notable legal disputes. Our reputation for thoughtfulness and integrity has put us at the forefront of experts who are considered in legal matters relating to hotels. We have assisted clients with such matters as bankruptcy and foreclosure, breach of contract, eminent domain and, property tax appeals. Even where there is no legal matter pending, many clients like having the security of knowing that Lodging Advisors is always ready to forcefully provide expert testimony if needed.
Lodging Advisors principals presented an overview of hotel investment issues in bankruptcy at the annual conference of the American Bankruptcy Institute.
Recent Dispute Resolution Engagements:
- We represented a lender in a foreclosure action for a sizable urban courtyard Hotel.
- We represented a developer in a dispute over a cancelled hotel development project.