ALIS Panelists: Steady Improvement, Strong Fundamentals for Hotels

By Natalie Dolce

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(Mark Your Calendars: RealShare REAL ESTATE 2012, March 22^nd in Los Angeles).

LOS ANGELES-Gearing up for the Americas Lodging Investment Summit, which takes place January 23 through the 25^th in Downtown L.A., GlobeSt.com’s Natalie Dolce chatted with ALIS panelist Douglas Kessler, president of Ashford Hospitality Trust on his hotel outlook and what is next for the REITs, and also catches up with some attendees.

Kessler’s outlook is cautious optimism since there “is still some risk out there,” but points out that the fundamentals for the hotel market remains strong. “I would anticipate greater upside than market downside,” he says. “There are some very strong fundamentals that continue to drive hotel performance and that is going to end up being reflected in a greater appetite for travel, a greater appetite for hotel transactions and a greater liquidity in the debt capital markets and overall better performance out of the lodging REITs in 2012.”

According to Kessler, REITs were very active in 2011 and pulled back a bit as a result of “the cost to acquire.” But as the fundamentals continue to show greater stability in a positive direction and as confidence continues to return, he says, that more transactions will become available in the market and “assuming a recovery in REIT share prices, REITs will re-engage and become active buyers again in 2012.” He adds that it may not be at the beginning of 2012, but as the year progresses, he anticipates greater REIT activity.

Kessler says strong fundamentals continue

Kessler joins a host of other panelists at the event, including keynote speaker Donald Trump. Event attendee John Pharr, president of Strand Development Co. LLC, is excited to be attending the event, telling GlobeSt.com that it will be his first time. “I have been in the hotel management business for approximately 40 years and look forward to hearing the experts discuss their projections for 2012,” he says. “As president of a hotel management company, I am always looking for ways to improve our operations and discuss current and future management needs with owners at the conference.”

Pharr is seeing a steady improvement in most markets. “Our resort markets will continue to improve, and we should have a good summer,” he tells GlobeSt.com. “The only areas that we are seeing some slowdown are in areas that are dependent on military and government travel.”

Pharr says 2012 should be
similar to last year with
some gradual improvement.

He also points out that many companies are still trying to find ways to reduce travel by way of teleconferencing, conference calls and webinars. “Overall, 2012 should be similar to last year with some gradual improvement,” he said. “I think the leisure segment may surprise us on the upside.”  

According to ALIS panelist Jon Wright, president and CEO at Access Point, "even with the political and economic uncertainty, there is positive trending analytics in the hotel industry, 2012 will be an outstanding year for hotel investors." Wright tells GlobeSt.com that "A substantial number of hotels will be upgraded over the next two years now that profitability is returning to the industry. Financing for renovations is now available, especially for proven operators in the major brands even if other components of the capital stack are locked up in the CMBS market."

Check back in the next few days for articles from the ALIS conference.

Categories: West, Hotels, Acquisitions/Dispositions, Development, Industry Coverage, Analysis, Los Angeles