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Comments by: Patrick PoggiManaging Director Holiday Fenoglio Fowler Miami

Poggi is new to the title at HFF but an experienced hand in his lodging industry specialization. We talked to Poggi about last week’s poll two weeks after he settled into his new chair and discussed the results–almost evenly split, but favoring the concept (53% of respondents) that yes, indeed the industry is overbranded. Not so fast, says Poggi, and he justifies his doubt below:

“There certainly have been a lot of new brands announced recently as different hospitality organizations get more involved in the franchising side of the business. Additionally, there has been a need for new brands in markets where it’s been impossible for developers to get a new flag to put on their hotel.

“Developers need that flag for bank financing, and due to existing areas of protection and existing brands in a local market, there are areas that have demand for new product where you can’t locate a flag. Hence, developers need new brands.

“Now, is that all markets? No. Is it all brands? Well, time will tell which new brands are successful and which are supported well, and a lot of that’s going to be up to the franchise companies and how well they support their brands and how well they develop the new product.

“In many cases these new brands are focusing on new-build development. They’re trying to establish themselves not only as a new brand but as a new type of product with new needs in mind for the business traveler and others. So many of them require new builds.

“In a way, the ramp-up in construction costs in the past few years has created a perfect storm in the hospitality environment and kept hotel developers from falling into that lemmings mentality of overbuilding. As a result of that, and especially because of better underwriting information that’s prevalent in the industry, banks are a little more cautious about jumping in for new-build construction in the whole segment, regardless of branding.”

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