Hotel and Leisure Advisors Suggest Now is Time to Build

Hotel and leisure advisors at The Lodging Conference in Phoenix, Arizona this month are holding a panel on why now is the time to build a hotel and why it is a good period for new lodging construction. Here are some excerpts from an article previewing it: “Offering a preview of what’s to come, Jim Butler, partner and chairman of the Global Hospitality Group for Jeffer Mangels Butler & Mitchell, gave the green light to those looking to get a start on new-build hotel projects. Trends stemming from a struggling economy, such as a dearth of financing in the past several years, meant little or no new supply in some markets. This paired with hotel industry fundamentals improving and hotel values exceeding cost of replacement in many markets makes now a great time to jump in on a new-construction hotel project, Butler said. He warned, however, that while all of the traditional considerations continue to apply, “debt and equity capital are so selective that only the best projects have a chance to get started now.” “Brad LeBlanc, VP of franchise development, upscale brands for Choice Hotels International, has a similar outlook, albeit from a franchise perspective. “Yes, absolutely this is a good time to kick-start new-build hotel projects for three reasons: the supply line is dry, forecasts show demand on the rise despite economic uncertainty and it is time to ride the cycle up while taking advantage of things that are still low such as construction pricing,” he said.” “The tricky part is financing,” he said. “Lenders are looking for both enough equity to minimize their risk and a proven track record by developers. They also like familiar brands.” In fact, LeBlanc explained that instead of putting up 20 percent equity to get a project done, as was the norm just five years ago, developers are now being asked to put in 50 percent or more because “the banks want no risk, so they do everything they can to minimize it.” Read what else these hotel and leisure advisors had to say here. Need other hotel real estate consultant resources for a new lodging or resort development? Enhance your hotel planning services with related publications at our bookstore. Or, if you are a hotel and leisure advisor, please share your latest new hotel project and how your client was able to fund it. Also, please state the particulars as to whether it was a cash or financed deal.