Good news was announced for hotel operators and owners interested in refinancing or acquiring a property.

telguru.com/wp-content/uploads/2011/07/Ash-Patel-Headshot.jpg”>

“Banks are lending,” said Ash Patel, president and COO at Premier Commercial Bank, at a recent hospitality investing conference. “We have money to lend and need to put it to work. We’ve had a very good track record with hotels.”

The Hospitality Investors Hangover Conference was hosted by R. A. Rauch & Associates, Inc in Irvine, CA in late June.

Attendees from Wells Fargo agreed, indicating that they also have money to lend to the hotel industry.

The main drivers of lender confidence in the lodging industry are the improved financial performance on a year-over-year basis and the outlook for growth in average rates.

“This is the first time since 2007 that lenders are starting to look at our industry,” said Robert Rauch, CHA and president of R.A. Rauch and Associates. “Typically, it takes a long run of success before they open the financial spigot. Premier understands that the next 3-5 years will be very strong.”

According to Smith Travel Research, 2010 hotel occupancies in the U.S. climbed five percentage points from 2009. Occupancy is up another five points in 2011. Average rates are up more than three percent this year, while they were flat in 2010.

In California, the news is even brighter with average rates up more than five percent this year. Along with average occupancy increases of seven percent, California’s revenue per available room (REVPAR) is up 12 percent. The San Francisco Bay Area is strongest in California at 20 percent REVPAR growth, followed by the Los Angeles metropolitan area at 12 percent and then San Diego, up eight percent in REVPAR.

Hotels represent a very attractive investment opportunity at this time because values had plummeted in 2009 and 2010 and the forecast going forward is very compelling.

Alan Reay, president of Atlas Hospitality, said, “There are some aggressive buyers out there now, led by the Real Estate Investment Trusts (REITS) who are buying based on future earnings.”

Top-tier and name brand properties in premium locations continue to be the easiest projects to secure financing, particularly in high barrier to entry markets, such as the east and west coasts. The development barriers include the cost of land, as well as approval processes.

“This conference shows that people are transacting, doing deals, even building in some cases,” said Natasha Perez, managing director of acquisitions and development for R. A. Rauch & Associates.

“This is a refreshing change from our last conference where the mood was depressing.”

SUMMARY OF HOSPITALITY INVESTORS HANGOVER CONFERENCE:

LENDING: Banks have liquidity and want to lend money. Location is crucial to lenders and brand names make a difference.

FORECAST: The next three years is looking bright for the hospitality industry, with a return to rates seen in 2007-2008, but with some inflation. There are no significant new developments in the near future, but perhaps in the next 2-3 years.

HOTEL MANAGEMENT: Management matters. The management company can help turn a property around to make it saleableor run it into the ground. A successful team is made up of a lawyer, tax professional, management company, lender, and broker.

R.A.RAUCH & ASSOCIATES
R. A. Rauch & Associates are specialists in the hotel sector, having built, owned and managed hotels, and consulted in the hotel sector for over 20 years. RAR focuses on hotel management, asset management, comprehensive hotel consulting and advisory services as well as expert witness work and litigation support. Assignments cover this complete range plus providing support to government agencies and financial institutions.

###