PHOENIX — There is no shortage of drama in the hotel industry as evidenced by the programming at last week’s 16th annual Lodging Conference. The hot-button topics included the troubled commercial mortgage-backed securities market, distressed property workouts and the art of hotel receivership. What follows are some memorable quotes from the three-day conference held at the Arizona Biltmore.
David Berins, managing partner of hotel advisory firm Berins & Co. LLC, explaining why he thinks revenue per available room (RevPAR) is a bogus statistic:
“The RevPAR of a hotel running 80% occupancy at a $40 average rate is exactly the same as a hotel running 40% occupancy at an $80 average rate. Which hotel do you think is more profitable? And why would you care if your RevPAR was higher or lower than the other hotel? When you want to see how a hotel is doing against its competition, you have to use a metric that makes some sense. RevPAR is a badly distorted statistic in my opinion that our industry ought to give less weight to.”
Michael Leven, president and chief operating officer of the Las Vegas Sands Corp., expressing his frustration with the political leadership in Washington:
“On Feb. 1, I will be in this business 50 years. I have never, never seen a government as bad, as atrocious, as difficult and as dangerous as the government we have in the United States today [applause]. I’m not saying dangerous to the individual, but I’m saying dangerous to business.”
Monty Bennett, president and CEO of Ashford Hospitality Trust, commenting on the stifling effect the federal government is having on the business community:
“You can’t talk about the hotel business without having a political discussion because the government has grown too big and too intrusive, and tells us everything to do and how to do it. It’s just ridiculous and it’s got to be scaled back, or we’ve got to get a whole ton of money together and go lobby these guys.”
Jack Westergom, managing director of Manhattan Hospitality Advisors, comparing and contrasting this real estate downturn with previous slumps:
‘While there are so many dynamics of this that are the same as every real estate cycle, there are so many things different this time. Certainly we’re a global economy now. The last time around you had Spanish and German banks jumping in to put up financing to bail out a lot of folks. Well, guess what? They are all in the same boat as we are in now, so there’s nobody to turn to unless you go to the Chinese banks and get 100% recourse financing and 50% loan-to-value.”
David Kong, president and CEO, Best Western International, challenging the notion that the most recent downturn is the result of a lack of demand rather than too much supply.
“Certainly if you look at the challenge that we have with new supply, it’ been growing at about 2% every year for the last 20 years on average, and the demand has been growing by only 1.2%. If you accumulate that gap over that 20-year period of time, it’s huge. So, I think supply definitely had something to do with the downturn last time.”
Morris Lasky, president and CEO of Lodging Unlimited, pointing out the ramifications for hotel owners who fail to understand that hotels are not real estate, but rather operating businesses housed in real estate.
“There are a huge percentage of people in the hotel industry who just don’t understand it. They’ve come into the industry with a tremendous amount of money from having success in other industries, and they’ve lost it. You know the old cliché: How do you make a small fortune in the hotel business? You start with a large fortune.”