CONFLICTING CONSTITUENTS

Hotels really are a different animal or perhaps a bird, as the “Peacock” graphic above illustrates. As an operating business without the benefit of long term leases, hotel can be volatile.  With a perishable inventory of rooms to be sold each night, sophisticated marketing tactics are critical. In good times, it is fairly easy to make money; however, as the economy slows and new supply enters the market, cash flows lessen and tensions rise. This is particularly true for overleveraged hotels. An experienced asset manager will focus on the financial interests of ownership, cutting through the somtimes conflicting interests of the “constituents”. The long-term and short-term objectives of the brand, the manager and the lender are not always in alignment. So as this incredible 8 year up-cycle begins to slow, the wise owner will not solely rely on their management company, but will rather seek independent advice.