Big opportunities for deep pockets

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One message that came out loud and clear at this week's NYU International Hospitality Industry Investment Conference was that opportunities abound for those of you with deep pockets. Cash is preferred but financing works, too, if you can access it. More than one speaker opined that now is a great time to buy hotel real estate.

Of course, it's not that easy. As HVS founder and valuation king Steve Rushmore pointed out, hotel values have bottomed out, and it will be a challenge to find financing for awhile (he predicts the next 12 months). Another problem he and other speakers and attendees brought up: Hotel owners have grown accustomed to rising values in the past five years or so and aren't yet willing to believe that the tide has turned. As a result, in many cases a significant gap exists between what sellers are asking and bidders are willing to pay.

So what can you do: Acquisitions are available but financing is tight and sellers are skittish? It's a good time to think about exploring partnerships that may be able accomplish what lone entities are unable to do. Look to other investors, previous partners, even competitors as potential dealmates. When times are tough, it's time to get creative.

According to Rushmore, hotel values dipped five percent last year and an additional four percent so far this year. That's especially dire news considering that values rose more than 20 percent in each of the years 2004 through '06. With lower values come fewer transactions: 20 hotel sales were booked through April, compared to 105 sales for the same period of '07. Clearly, nobody's selling.

Finally, as is tradition, Rushmore gave his "weather forecast" for a variety of hotel markets. His recommendations of markets in which to sell hotels are New Orleans, New York, Boston, San Francisco, Miami, San Jose, Seattle and Baltimore. It's time to sell if you have properties in Las Vegas, San Ant onio, Richmond, Greensboro, Hartford and Norfolk.

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