The best part of back-to-back conferences at the beginning of the year is they provide a gauge of what’s in store for the months ahead. It was no different last week as the Americas Lodging Investment Summit in San Diego and the Hotel Brokers International annual meeting in Las Vegas provided more than just a glimpse of what’s going on in the hotel industry:

• “Less worse” is how most people are looking at 2010. It’s not going to be great, but it will be less worse than 2009.
• Insurance companies such as Pacific Life are beginning to dip their toes into the hotel-lending space, and that’s a good sign there’s at least something positive starting to happen. Of course, these loans will mostly be for big-box hotels that at one time had a value of more than US$100 million. Therefore, we’re still waiting to hear of a mass of lenders interested in jumping in for properties previously valued at US$20 million to US$80 million.
• Regional banks will start foreclosing on hotels this year as they will get pressure from FDIC regulators to shore up their books.
• A number of companies, including HEI Hotels & Resorts and Richfield Hospitality, have money to lend to hotel owners who have troubled assets. The companies want to lend what essentially is mezzanine financing, but instead of having the money paid back, the companies want an ownership stake in the troubled asset.
• In general, as long as hotel owners are meeting their operating expenses and can meet debt interest obligations and have a penny to pay the bank, they won’t receive too much chin music from the bank.
• Any banks lending money are requiring 50 percent equity for the discussion to even get started.
• There’s belief that the long-awaited increase of the Small Business Administration loan limit to US$5 million is around the corner. The increase has been talked about for more than a year. The limit currently is US$2 million. When it is increased, lenders such as PMC Commercial Trust (which hasn’t stopped giving SBA loans during the downturn) will find plenty of borrowers in line.
• Regardless of the reason for gathering—a general session, a panel discussion, networking events or late-night rendezvous at the lobby bar—there is a firm belief that the industry has hit bottom. No one is sure if there’s going to be a W recovery—which will mean an increase then a decrease—but there’s a strong belief that the bottom has been reached in operating performance and transaction activity.
• Most executives I talked with are budgeting for RevPAR to be between -6 percent and +3 percent. The more optimistic groups are convinced there will be a huge uptick in the industry following a tough first quarter. Those with a more pessimistic view think the comeback won’t start until late in the year.
• One of the more interesting approaches to what the recovery might look like was presented by a couple of attendees who said they expect it to look like a square-root sign. That’s some ups and downs and then a long flat recovery. I tend to think it will have the look of a Nike swoosh—a steady gain in momentum beginning late in the third quarter of this year.
• Hotels took a beating during request-for-proposals season as clients were looking to save money any way they could. A number of people told me they took the approach of, “Hey, we can make this cut now, but if we do this for clients, we won’t be here next year. So, for long-term considerations, don’t try to squeeze every cent out me for rates.” Most of the people said the clients were understanding. My question: When good times return, will we remember those clients when we’re raising rates?
• In pre-ALIS polling, 38 percent of attendees said a turnaround will occur in the third quarter of this year, Jim Burba told attendees. Seventy-five percent said it will come sometime this year. What’s more encouraging is that 60 percent said their companies will grow this year.
• The biggest worry for conference attendees clearly were the lack of debt and the lack of group business.
• A stark statistic from Mark Lomanno’s Smith Travel Research presentation: On an average day, the hotel industry sells 215,000 fewer rooms (US$42 million in revenue) than it did 18 months ago.
• Also from Lomanno: High-end hotels were affected by rate more than demand, and low-end hotels were affected more by demand than rate.
• The quote that best sums up the transaction environment comes from Arthur De Haast of Jones Lang LaSalle Hotels: “There’s a lot of stress on the system, but not as much distress, and that’s what the buyer is looking for.”
• It was no surprise when the 1,001-room Hilton Orland-Bonnet Creek and the 498-room Waldorf-Astoria Orlando took home the Development of the Year honors at ALIS. The US$550-million project developed by KUD International LLC and Brooksville Development Corporation was among the most impressive hotel projects that opened last year. … Other ALIS award winners included the US$44.24-million purchase of the iconic 322-room Windsor Court Hotel in New Orleans, Louisiana, as the winner of the Single Asset Transaction of the Year Award. The Berger Company and Crow Holdings paid about US$137,422 per room to Orient Express Hotels for the property. … Ron Danko, executive vice president of CBRE Hotels, won the Jack A. Shaffer Financial Advisor of the Year Award. … And Randy Smith, founder and CEO of STR, was awarded the Lifetime Achievement Award from the International Society of Hospitality Consultants at ALIS.
• There is some sentiment that top assets in certain markets are ready to start pushing rate.
• There is more demand than ever for a broker’s opinion of value—especially as more banks take back hotels. They’re looking for some consistent valuation, and it appears brokers can provide that stability for lenders looking to unload assets from their balance sheets.