May, 2008

WISDOM AND FUNDAMENTALS WILL PREVAIL
 
The lodging industry has and always will be a dynamic business. The wise investor that adheres to fundamentals will prosper. The market is never static, the only certainty is change!

Adhering to the fundamentals involves harkening back to some old adages about real estate in general; for instance, “Location, location, location,” “All real estate is local,” and “There’s a deal on every corner,” are among the best. Macroeconomic trends in the industry are often helpful for gauging the direction an industry is moving. Although these trends are interesting and important to prognosticators, lenders, consultants and speakers,  the local trends and dynamics are what drive opportunity and value for buyers and sellers. Macro trends do not dictate success when a market is increasing, nor failure when in decline. Those operators that compete locally and pay attention to/take advantage of the local market dynamics will continue to do well regardless of general trends.

Other required fundamentals for the hotel business, which are outside the realm of real estate, relate to the customer. Hoteliers frequently relate successful performance metrics when others in national, regional and even local markets are bemoaning declining macro conditions.  The secret to success for these operators can be distilled by other fundamental phrases, “It all comes down to customer service,” “Treat the guest as you would wish to be treated,” and “Put the customer first.” Hoteliers that have a serving heart and attention to detail consistently outperform those of lesser intent.

The blend of astute local strategic planning and treating people right are the essential ingredients used by successful hoteliers to create opportunity regardless of the position of the hotel industry in the market cycle. Opportunity is truly available on every corner. Examples of how a hotel operator may capitalize on local trends and operating efficiencies include: strategic rebranding or renovation, improvements in functional utility, conversion from full to limited service and application of highest and best use principles (partial demolition or splitting of surplus land).

CBRE Hotel professionals nationwide have deep lodging experience and can help buyers and sellers recognize these opportunities. Our analysis can render a fresh perspective adding value to the hotel transaction. I adhere to the fundamentals of honesty, integrity, relationship, and market knowledge. Please view my website and download the lodging market overviews or other material provided there. Feel free to contact me with specific market or property questions. I look forward to building a relationship with you whether your interest is to buy, sell or hold.

Respectfully,

Eric E. Belfrage, CRE, ISHC, MAI