The maturation of those newer hotels is among the reasons why the company's 2005 guidance calls for significant gains in RevPAR, net income and funds from operations. RevPAR improvements in a range from 4% to 6% are predicted. Net income for 2005 is expected to range between $6.3 million and $6.6 million, which would be a significant jump from 2004 net income of just over $2 million. This year's FFO is expected to range between $17.7 million and $18.1 million, compared with FFO of approximately $11.6 million in 2004, and that was up from just over $7.7 million the previous year.

"We are becoming increasingly confident in the staying power of the general economy and hospitality industry recovery and expect the momentum to continue into 2005 and 2006," Shah says. As its newest acquisitions mature, Hersha is positioned to also add new ones.

At the end of 2004, "we had approximately $36.5 million of outstanding development loans, under which we have first rights of refusal to purchase the hotel on completion," according to Shah. These developments include "multiple hotels in New York City and in several of our other core markets."

Development financing is a route Hersha has used for past acquisitions. "This unique structure…affords us acquisition opportunities at or below-market prices where acquisitions are otherwise very difficult to source," Shah adds. "Generally speaking, our portfolio is quite young, with 50% of our hotels less than 24 months old and a median age of only three years. We believe we are well positioned to grow internally, through improved operations, and externally, through additional acquisitions."