His fellow Power Panelist, HEI Hotels & Resorts' Roger Clark, recalled that during the last major downturn of the early 1990s, "you had an active market" thanks to the RTC. At the moment, he said, it's anything but active.

The numbers bear out Clark's description. In a "Lending, Development and Transaction Update" following the keynote address, SVP J.P. Ford of Lodging Econometrics said that single, portfolio and M&A hotel deals reached 1,660, 674 and 1,382, respectively, over a 12-month period at their peaks earlier this decade. Year to date in 2009, the respective figures for these types of transactions are 206, six and zero. Panelists cited declining RevPAR and the continued credit freeze as factors, along with the glacial rate at which distressed hospitality assets are reaching the market.

However, the conference's theme, "The Upside of the Downturn," put the emphasis on finding opportunities. As Geoff Davis, president of HREC Investment Advisors, put it in his opening remarks, "We know it's bad. Get over it and move forward."

Keynote speaker Ross Woods, principal of Hotel Investment Strategies, LLC, urged his audience to disengage their perspectives from the short-term viewpoints favored by most analysts and instead take the long view of the sector. "Fortunes are made in downturns because fortunes are lost in downturns," he said.

Noting that lodging has been the highest-risk of the five major food groups in the past 10 years and is currently the commercial sector hardest-hit by the recession, Woods nonetheless said there are three compelling reasons to invest in hotels. First, hotels have provided the highest income returns at an average 8.9% over the past 30 years; second, they offer significant capital returns in short windows; and third, they provide opportunities for diversification in commingling funds.

Sounding a theme later echoed by other speakers, Woods advised understanding the particulars of each market, as no two respond in exactly the same way to economic drivers. "You should be buying into markets, not hotels per se," he said. Similarly, Clark--who as SVP of acquisitions and development at HEI thinks now is actually an opportune time to buy--said it's "myopic" to look at US hotel fundamentals generally when individual markets might be faring better.

Instant Insights /

RTC Sequel May Be in Hotels' Future

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