There are several “mixed” signs in publications that we follow as part of our hospitality consulting services advising clients that suggests the hotel industry is no longer in a recession and financing is beginning to thaw. However, there is also news that contradicts parts of this as well. Here are some of the highlights:Hotel Building – In Bloomberg it was recently reported that “Banks are recovering more money from loans backed by hotels than other types of commercial real estate, prompting Wells Fargo, JPMorgan Chase and others to increase such financing.” – According to the Editors at Lodging Hospitality “It’s beginning to look a lot like the old days: big-ticket transactions, banks looking to lend and a new brand announced every few weeks.” – And in a related article at LH, “The U.S. lodging industry hit bottom sometime during late 2009 and early 2010 and has started to recover nicely. The recovery occurred about 10 to 12 months earlier than what many industry experts believed two years ago.” – However, the prior news gets subdued in Hotel News Now stating that “Lenders will deploy a little more capital into the hotel space next year, but don’t expect full-fledged lending to resume until there is more certainty about the larger economy.” View the full articles here: Banks bolster financing for hotels Hotel Industry Returning to Normalcy? Did You Miss the Bottom of the Hotel Cycle? Little lending loosening in 2011 One aspect worth noting from a hospitality consulting perspective by many is that the recovery in the hotel industry has started sooner than expected and experts believe the recession is in essence over. This is also being fortified by reports that the major lenders are looking to open up their lending opportunities in the hotel sector. Still, passivity in making hotel loans given all the distress that is purportedly on many banks books suggests limited growth in any significant new hotel lending. Are lenders really starting to make loans to the average hotelier or is it just in the high volume and well heeled financial sectors such as REITs and larger Private Equity Funds? Secondly, how much from a hospitality consulting viewpoint is the recession completely over in consumers and travelers minds given that unemployment is still close to ten percent and will this translate into higher occupancies and room rates to grow a hotel’s income to qualify for new financing? If you are a hotel lender, investor or owner, please share your comments…
