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Many hotel advisors and senior management of lodging property companies here in the USA have been wondering about what to expect this year given the mixed signs about the economy. Last month, a hotel capitalist and principal of a major investment banking firm offered up his Dr. Doom predictions that uncertainty in 2012 is as big as it has ever been. According to this industry update about what to expect, there are several reasons as to why you should not believe what is being touted around the hotel industry conferences and other venues. Here are several excerpts from the full article that suggests why management, investors and hotel advisors should be concerned: “Real unemployment, or partial employment, remains more than 16%. Workforce active participation is the lowest in recent history; that means a lot of people with no regular income.” “An attack on banks and other headaches that is about to become a situation where nobody who is not platinum credit and with a 20% down payment will be able to get a loan. That will further depress the housing market and the economic recovery.” “There are huge maturities coming in 2012 and 2013. Refinancing is going to be very problematic for many borrowers with ordinary assets, even if your net operating income is better.” “Values are not likely to rise in 2012. It is a year when a lot of assets will be coming into the distressed market.” In a separate story and if you are a hotel investment advisor looking for distressed hotels, a feeding frenzy is expected when European Banks start dumping their loans. Or, will they take a page from the book of their American banking and hotel workout consultant counterparts and extend and pretend rather than foreclose? Or, does all this Dr. Doom talk run contrary with what hotel advisors and others in investment and management expect? Please share your comments below.
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