I had the pleasure of presenting an industry overview at the Meet the Money Conference hosted by Jim Butler this week in L.A. The theme of the conference was certainly one of optimism with revenue clearly on the rise. There was a bit of skepticism however, regarding the high valuations of public equity which looms ominously large given the dramatic events in the stock market this week.

The phrase “extend and pretend” seemed to draw the ire of some lenders who were really more involved with “extend and amend” practices during the last four quarters. Since late 2008, many buyers used the phrase “extend and pretend” to imply that the creditors were simply kicking the can down the road by ignoring the enormous diminution of value of hotel assets and allowing the leverage to continue rather than letting the market correct by placing large swaths of assets up for sale.

But, as we see revenue rising significantly in 2010, extending the loans, which are actually at low interest levels, was about the smartest thing they could do rather than foreclosing and dumping those properties in a fire sale. At least that is how it appears so far. With one special servicer commenting that for every one hotel loan issue they resolve, at least four more come in their door, it would appear that pressure will mount to dispose of assets unless servicers expand their expertise from amending to asset management.

Lastly, an interesting paradox emerged at the Meet the Money conference, which bears some notice. A number of servicers indicated that they are required to obtain several “data points” with regard to the value of the asset that comes under their asset management. Typically these data points include a formal appraisal and several broker opinion letters (regarding value). What was interesting was the tenor that more weight is often given to the broker opinions because they see more of them and are perceived as better reflections of the market today. Many brokers suggest that in this environment, price-per-pound (room) sales and room-revenue multipliers may be the only real tools that buyers are using consistently since long term revenues are unpredictable and strong operating margins unsustainable. Appraisers suggest that such an analysis is overly simplified and too rudimentary upon which to base important long term investment decisions. We will see how this plays out through the remainder of 2010.