Speakers Stress Opportunity in Current Market

[IMGCAP(1)]NEW YORK CITY-The economy does not look good at the moment, agreed keynote speaker Mitesh Shah, senior managing principal and CEO of Noble Investment Group, and speaker Pat Ford, president of Lodging Econometrics at Tuesday’s second annual RealShare Hotel Investment and Finance Summit, sponsored by Real Estate Media. The conference, held at the Waldorf-Astoria Hotel here, drew more than 350 attendees.

Shah and his Noble Investment Group had seen a lot of broken deals and narrower booking windows for hotels over the last quarter. Ford noted the swift drop in the GDP and a “tightening” of lending, which spiked in 2007, based on a Federal Reserve Senior Loan Officer Opinion Survey. There was also a lot of foreign capital in the market. But the two speakers did not see a hopeless market.

[IMGCAP(2)]“There is doubt as to whether we are in a recession,” Shah said. “I’m not sure that it matters.” He continued to explain that there is a lot of opportunity in the current market if one exercises discipline and returns to the basic techniques for successful hospitality investment: buying at the right base, branding and market location. He also reminded attendees that a lower dollar means that foreign travel to the US is up, especially from Canada, Europe, India and China.

Ford reinforced the idea of opportunity in his presentation, looking to the construction pipeline as an indication of growth. As of the first quarter of 2008, Econometrics has a preliminary prediction of 760,000 rooms in the construction pipeline as compared to 256,000 in 2003. “Why would the pipeline continue to develop in the downturn of an economic crisis?” Ford queried. “Local lenders see hotels as an attractive asset class. Hotel funds have been solid. We’re in the middle of a branding revolution.”

Ford focused on the branding as a path to gain, emphasizing the keys to success are market penetration and market share. The top five companies account for 63% of all the projects that are already in the pipeline with 20% of all pipeline rooms as upscale and 29% as independents, and Ford reminded the audience that “Independents are a parking lot for branding decisions yet to be made.”

Both speakers saw the market optimistically, as well as opportunistically. Shah summed up the morning keynote speech with a quote by William Jennings Bryant: “Destiny is not a matter of chance; it is a matter of choice. It is not something to be waited for; it is something to be achieved.”