Ford: At this point in time, the economy is not as bad as peoplethought it might be, even though it's soft and on the borderline ofrecession. It's not gangbusters, it's not terrific, but it'sstronger than we had anticipated. If I'm a developer, it isn't badcompared to where I was.The way the credit crisis has rolled out,there's very little institutional financing available, but adeveloper in a community or region can still get projects financed.The financing is going to require more equity, the underwriting isgoing to be much tougher and the terms are going to be moredifficult than what they were. But that changes all the time fordevelopers anyway. That's the nature of their business.

|

Financing is reasonably available for the parts of the pipelinethat are really moving ahead, which are upscale types of propertiesand mid-market and economy properties. Those developers don't havea problem. How long will it stay this way? It really relates towhere we're going with the economy and it's predicated almostperfectly.

|

GlobeSt.com: If conditions are as gloomy as national newsreports portray, what do you think are the chances of an 18thquarter of growth?

|

Ford: The pipeline will keep growing in the next couple ofquarters, but at a moderated pace. There will still be growth, butit won't be the aggressive nature that it has been. Lots of peopleare saying things are going to get much worse, and developersrespond to that.

|

GlobeSt.com: You reported just last week that the Canadianpipeline appears to have peaked. What are some of the differencesin dynamics between the US and its neighbors?

|

Ford: First of all, at the economy level, the US has experiencedsoftening ahead of these areas, which haven't softened to theextent that we have yet. These other areas in the Americas are allpretty heavily tied to the US economy, so what happens in Americadoes impact Canada, the Caribbean, Mexico and Central America.There's not going to be any decoupling.

|

You can see from the three rather rapid interest rate cuts bythe Bank of Canada (since December 2007) that they're acting likethere's going to be a growth problem ahead. Canadian developersalready have some concern because the pipeline has been in atopping-out formation rather than a growth formation for the lastthree quarters. They're looking at the US and saying this is what'slikely to happen in Canada. Developers anticipate there's going tobe problems.

|

One of the key pieces is American tourism into Canada, which hasbeen declining because of the weaker US dollar and is viewed as farless of a bargain. Because of the softening in the Canadianeconomy, travel inside of Canada is also projected to decline andsoften this year.

|

GlobeSt.com: You have a report coming out soon about hoteldevelopment in the Caribbean, Mexico and Central America. What willit say?

|

Ford: Latin American economies have been strong and haven'texperienced significant softening to date. The hotel business had avery good first quarter throughout the region. Air traffic into theregion is up substantially over last year. Mexico and CentralAmerica destinations represent pretty good travel bargains.

|

The pipeline continues to grow. With the exception of majorindustrialized cities in Mexico, lots of the development isbeachfront throughout the Caribbean, throughout Central America andalong the east and west coasts of Mexico. These are mega-resortsand mixed-use facilities, many of them with residential complexes,villas and clusters of hotels where new communities are beingbuilt. They attract world-class developers and headline-typelenders, and many of them have multiple partners in the deal. Theyare the types of projects that don't fit into cycles and are verylong-term viewpoints and timelines attached to them, so whathappens today and tomorrow is not as significant compared to whatthe long-term trends are.

|

GlobeSt.com: Where do you view the hot spots for internationalhotel development?

|

Ford: Dubai has a pretty strong head-start through this decade,with lots of properties currently opening and lots more in thepipeline and under construction. Abu Dhabi is coming out of the boxand has plans that are as expansive as Dubai but are probably fouror five years behind. Dubai and Saudi Arabia have seen Dubaigetting a fast start and there is lots of catch-up going on.

|

There's a huge pipeline in China around the Beijing area, whichis being powered by the Olympic Games this year, and Shanghai,which is being powered by the 2010 World's Fair. Macau is the newLas Vegas and, strangely enough, already exceeds Las Vegas ingaming revenue. Hong Kong is also very good.

|

Singapore historically has been the financial center ofSoutheast Asia, and as such has been the meetings and conventioncenter. When they look at what Macau has done with gaming andconventions, they have decided to accelerate and move forward.Sheldon Adelson is building an enormous gaming infrastructure withthree hotels in Downtown Singapore, and in an off-island situationcalled Sentosa there are another six world-class resorts goingup.

|

And then there is Russia. You can't find a hotel room inMoscow!

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.