During a recent meeting, members of the Lodging Industry Investment Council talked about what has caught them off guard in recent months.
Andrea Foster, SVP of development at Marcus Hotels & Resorts, said she wasn’t expecting the “acceleration of happenings that are impacting our industry” that are out of its control, referring to recent natural disasters such as Hurricanes Harvey and Irma, and the Wine Country wildfires, as well as the shooting at the Mandalay Bay in Las Vegas.
“We’re getting to a point now where things that we cannot foresee seem to be happening more quickly, and that’s sort of our reality … that one thing after another (is happening,) and that’s concerning. We can look and see that we have labor shortages; we can look ahead and we can see we have labor costs rising, construction costs are rising. We can plan (for) that,” she said, but not for these other unexpected events.
Larry Shupnick, SVP at Interstate Hotels & Resorts, said he was surprised his hotels in Napa Valley were not damaged by the recent wildfires, and benefitted a bit from housing people.
“Our three hotels in Napa Valley were not damaged in any way by the fire, and we housed, for probably two weeks, all of the people from utility companies (and) first responders,” he said.
Charlie Muller, principal at Solid Rock Group, said the company’s Houston property was not damaged by Hurricane Harvey.
“Kind of an off-guard moment was the unfortunate, but somewhat fortunate, Hurricane Harvey in Houston,” he said. “We had an asset down there that is the beneficiary of some pretty good business because it had no damage at all, so it’s been an unusual lift for us in an otherwise depressing performance of an asset.”
Buying and selling
For Greenwood Hospitality Principal Aik Hong Tan, the lack of acquisitions at this point in the cycle has been surprising.
“From a pipeline of sales, acquisitions in particular, there’s not as many as I would think this late in the cycle,” he said, adding that a lot of people are refinancing versus selling, which is traditionally more likely this late in the cycle.
Rick Frank, board member at American Hotel Income Properties REIT, said the company has “been possibly the most prolific buyer of hotels so far in 2017,” and he was surprised by the locations of a few recent hotel acquisitions.
“Over the last two weeks, I approved a deal to buy a Days Inn in Fargo, and a no-name hotel in Whitefish, Montana,” he said, “and in all my years in the business, I never thought I would approve a hotel acquisition in Fargo, North Dakota, and Whitefish, Montana.”
Scott Andrews, managing director of hotel franchise finance at Wells Fargo, said he’s heard that some developers are looking into acquisitions, even though the costs of acquisition are high, because construction costs are worse.
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