Development Opinion Articles

August 24, 2020

HVS Monday Musings: Why Professional Asset Management Adds Value to Hotel Investors?

The role of a professional Asset Manager has traditionally been underplayed in India, even though the expertise brought in by a quality Asset Manager can yield great results for Investors. This is already a proven fact in several mature markets where Hotel Investors extensively use their services. The role of the Asset Manager has become even more crucial in the current times of uncharted waters.How do professional Asset Managers add value to Hotel Investors? Asset Managers work with owners to maximize the asset value and potential by optimizing operational efficiencies to deliver better ROI.

By Dipti Mohan and Ajay Mehtani

Opinion Article

August 18, 2020

Q2 2020 Real Estate Indices: Are All Crises the Same?

Although the Great Recession is useful in offering insights into how hotel performance might fare during a crisis, we show that the current crisis is much worse in terms of risk and the loss of relative wealth. Not surprisingly while the price of hotels in all regions continue to exhibit negative price momentum, hotels in the Middle Atlantic and New England regions were particularly hard hit. Hotels in gateway cities experienced less price decline relative to those in non-gateway cities. Both our moving average trendlines and standardized unexpected price performance metrics indicate a hemorrhaging in the price of both large and small hotels. The cost of debt financing spiked in this quarter with financing available only on refi deals in general. The relative risk premium that lenders require for hotels over and above other commercial real estate has also increased on these refi deals. Our tea leaves suggest that both large and small hotels should continue to decline in price. This is report number 35 of the index series.

By Crocker Liu, Robert A. Beck Professor of Hospitality Financial Management, Cornell

Opinion Article

August 4, 2020

Q2 2020 Major US Hotel Sales Survey

The year 2020 will not be soon forgotten as the spread of COVID-19 and society's reaction to the virus have combined to devastate the global economy. U.S. GDP in the second quarter declined by 32.9 percent on an annualized basis, the most significant quarterly decline observed since the 1940's. While the stock market has rebounded considerably from its lows and seems to be reflecting an optimistic view regarding an economic recovery, base case will be a slow and very bumpy re-opening of the economy.

By Daniel Lesser, President & CEO, LW Hospitality Advisors LLC (LWHA)

United States

Opinion Article

August 4, 2020

Hotel Development: Are Better Feasibility Studies Actually Feasible?

Hotel development is a complex and expensive process involving multiple stakeholders with unique and often conflicting objectives. Since investors, operators, lenders and consultants all use distinct criteria to evaluate a hotel's projected value, they may green-light projects that are unlikely to satisfy the other parties' financial goals. In order to minimize such subjectivity, investment in a new hotel's development is typically preceded by a feasibility study, the stated purpose of which is to provide the relevant stakeholders with the information and analysis necessary to estimate the project's financial viability.

By Demian Hodari†, Late Associate Professor of Strategic Management, EHL

Opinion Article

July 31, 2020

Why Is Commercial Real Estate Underrated In Public Discourse?

Excerpts from our recent research paper: Das, P., Füss, R.; Hanle, B. & Russ, I. "The Cross-Over Effect of Irrational Sentiments in Housing, Commercial Property, and Stock Markets", in Journal of Banking and Finance.

By Dr. Prashant Das and Dr. Roland Füss

Opinion Article

July 29, 2020

Industry Report: Hotel Investment Scene In Central & Eastern Europe

Central & Eastern Europe (CEE) may have, in the past, been perceived as a relatively unstable investment region, especially for the risk averse. However, record hotel investment volumes in the last years have proven otherwise, as investors begin looking to hotel real estate in the region, drawn by the relatively higher returns of hotels and more attractive yields compared to western Europe, which are typically more compressed.

By Kimberly Yoong, Assistant Vice President, Hotel Financing, Aareal Bank AG

Opinion Article

July 17, 2020

How Much Is a Hotel Worth?

n the case of property tax assessments in Florida, probably somewhat less than the county property appraiser assumes. A recent court decision invalidated the method used by many county property tax appraisers in Florida to develop "just" values for hotels.

By Allison Fogarty, Managing Director, Pinnacle Advisory Group

Florida, United States

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Hospitality Net

Opinion Article

June 25, 2020

Why Trophy Hotel Assets Make a Legacy?

Trophy hotel is a term used in hospitality real estate to define a property in remarkably high in demand and either super prime or prime locations by investors. These assets are generally a status symbol with well-known name recognition, a landmark, iconic buildings located in prestigious prime address with strong underlying property fundamentals such as unique distinctive design architectures and the finest construction and highest quality finishes money can buy.

By Korosh Farazad, Founder & Chairman of Farazad Group of Companies and Member of Board for Trinity Hospitality Group, Farazad Group Ltd.

Opinion Article

June 23, 2020

Major Las Vegas Development Projects Status Update

As of the end of January 2020, prior to the closures of businesses determined to be non-essential and the announcement of stay-at-home recommendations due to COVID-19, the Las Vegas Convention and Visitors Authority (LVCVA) indicated that construction of over 12,000 hotel rooms was scheduled to be completed by 2023. While all announced projects may have not ended up being completed, strong visitation over the past few years, overall market hotel/motel occupancy of 88.9% in 2019, and the construction of projects that were expected to be major demand generators, warranted the development of significant guestroom supply at that time. While the pandemic has caused a few major projects to be put on hold, the continuing development of several major projects will be beneficial for the recovery of the Las Vegas market.

By Shannon Okada, Managing Director of Gaming with HVS, HVS

Las Vegas, Nevada, United States

Opinion Article

June 22, 2020

Independent Hotel Owners Should Look At Integrating Their Assets Into A Portfolio

Stronger together! Merge to survive… and thrive! For hotel owners and investors, access to friendly capital, shared resources and additional capital appreciation provided by entering assets into a partnership - that famous "portfolio effect", can these days be what stands between survival and losing control.

By Gustav Bjoern, Senior Hotel Investment Banker, Global Asset Solutions

Opinion Article

June 5, 2020

Six Guidelines To A Sustainable Recovery For Hotels Post-COVID-19

Sustainability is regarded as the key to a successful business in the 21st century. It is fast becoming a top concern for public and private sectors alike. The hospitality industry is no exception. 2020 was set to be a year of collective action on climate change until COVID-19 brought many unknowns, including how future travel behavior will develop and whether sustainable initiatives will be forgotten or gain priority. While travel will remain limited in the short-term and the industry will continue to suffer from excess capacity, the ability to offer the right experience to these fewer travelers will be crucial in attracting them. The question thus becomes whether, in the post-COVID-19 world, ethical and sustainable experiences matter more or less to customers than before.

By Alex Sogno, CEO, Global Asset Solutions

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Hospitality Net

Opinion Article

May 22, 2020

Why Asset Management is essential at Board level in a post-COVID world?

Today's COVID-19 is without precedent and requires us to adapt very quickly to ensure business sustainability. The impact on the hospitality industry has been severe and forcing the closure of many hotels and restaurants due to a lack of demand.

By Anne-Marie Auriault, Founder & Managing Director, Pimlico Asset Management

Opinion Article

May 8, 2020

Hotel Asset Management – In Good Times and Bad

The practice of asset management for hotels entering the third decade of the 21st Century has evolved into an intricate process of analyzing layers of data and operating results, and then acting based upon the conclusions. The process requires great focus. Asset management is the practice of managing the value of the owner's investment. And now that process becomes more urgent, but also more important than ever before.

By Hank Fonde, Senior Director, CBRE Hotels

United States

Opinion Article

May 1, 2020

Commercial Real Estate Valuation in the COVID-19 Era

When COVID-19 struck, the markets reacted. Since the beginning of 2020, REIT returns have nosedived: -60% in retail and hotel sectors, and -30% in residential sector which is usually considered to be a safe asset. In sum: Stock markets are brutal, often anonymous and powerful when it comes to pricing assets. Commercial Real Estate (CRE) is a different ball-game altogether. CRE experiences much fewer transactions with price movements estimated through valuation.

By Remy Rein and Dr. Prashant Das

Opinion Article

April 29, 2020

Being opportunistic without being a shark

Today's climate may present a new opportunity for the hospitality industry for those sitting with cash, or some form of available cash.

By Frances Kiradjian, Founder/CEO, BLLA

Opinion Article

April 23, 2020

Further Insights on What Hoteliers Can Do to Prepare for COVID-19 Recovery

In the previous article, I mentioned some thoughts on the position of hoteliers and restaurateurs in regards to this unprecedented crisis that the industry is facing. Now is the time to prepare and start some of the activities and conversations that might help for when things are picking up again.

By Pierre Verbeke

Opinion Article

April 14, 2020

Hotel Real Estate in a Turbulent Macro-Economic Environment

Would you invest your money and time in a hotel project? Once more, the world is hit by a crisis, a pandemic this time, which affects all world economies. Many industries are suffering in particular the hotel industry.

By Jochen de Peuter-Rutten, Consultant, EHL

Opinion Article

March 24, 2020

Hotel Industry Crisis: 8 Do’s and Don’ts for Distressed Hotels

As the COVID-19 crisis grows in the US and elsewhere outside China, hotels and restaurants are among the businesses hardest hit. In select markets like Seattle and San Francisco, hotels are reporting single digit occupancies and crushed ADRs. Many hotels do not have the cash flow to keep their doors open. The major hotel companies are talking of furloughs for tens of thousands of hotel employees and many properties are looking at closure or skeleton team maintenance operations.

By Guy Maisnik and Jim Butler

United States

Opinion Article

March 18, 2020

COVID-19 Financing Strategic Options For Hotel Owners

Along with all the other industries around the world the U.S. hotel industry has been blindsided by the COVID-19 Global Pandemic Black Swan Event. Instantly, hotel owners have found themselves with empty hotels, depleted cash reserves, and wondering how they will be able to make their monthly mortgage payments and payroll which were hardly ever considered to be a problem in the expansionary period leading up to COVID-19.

By Harry George Spirides, President, Spirides Hotel Finance Company

United States

Opinion Article

March 10, 2020

Asset Management – Why Bother?

In the course of each year my colleagues and I see a huge number of hotel P&Ls and, within them, there are often wide variances in performance, even in like-for-like situations - whether it is better or worse revenue generation, cost control or effectiveness. Some hotel management companies don't produce an adequate return on their owners' investment by doing as much as they possibly can to increase revenues, reduce operating costs and improve bottom-line profits and cash flow. Only when given a 'kick' from the owner or from a third-party asset manager acting on behalf of the owner does the optimisation of a hotel's performance - and therefore its value - often become a reality.

By Russell Kett, Chairman at HVS - London Office, HVS