Question – If you had $100 million to buy hotels …

August 19, 2009

I just attended an interesting webinar sponsored by HREC Investments.  The panel included a number of notable hotel advisors and asset managers.  The following question was posed during the discussion – “If you had $100 million to invest, where would you buy and what would you purchase?”

Among the panel there was some consistency as well as some divergent opinions.  One of the panelists noted there will be at least 3 to 4 more months of a logjam before lenders and owners to get realistic in their pricing.

Among the answers:

  • 1. Commercial hotels in major markets
  • 2. Urban hotels with good upside employment potential
  • 3. Buy debt from lenders, especially regional banks (not CMBS)
  • 4. Secondary/Tertiary markets with diverse demand generators

One speaker emphasized that the listeners should camp out at the FDIC office in Dallas.  His belief is that the FDIC will be selling off the inherited notes as a result of bank seizures at a much discounted price.  Same will be true of Wall Street firms at the end of the year in order to clear up their balance sheets.

There was some unanimity on what NOT to buy at this time.  Two panelists suggested staying away from destination resorts due to the volatility that exists in this segment.  Another urged the audience not to underestimate the time, effort and money associated with buying debt.  It may be better to negotiate with the lender PRIOR to the foreclosure and pre-arrange the purchase before the final legal action.


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