I’m heading to Dallas today to sit it on the Fishing for Solutions conference at the Gaylord Texan Resort. It should be an interesting event as the commercial lending and hospitality communities will meet to discuss the issues facing hotel loans.
As we all search for information, including data and real-life trends, that is shaping the hotel industry during the most unpredictable period in the last seven years, the conference’s topics on the agenda are intriguing:
• Trends in hotel defaults
• Valuations
• Issues Facing CMBS Special Servicers and Lender Work Out Departments
• What are the brands saying?
• What are the brokers saying?
• What hotel types are safest?
• What hotel segments are most at risk?
In my quest to stay as current as possible on the turbulent economy and what it holds for the hotel industry, it was fortuitous that I ran into an article from the St. Louis Post-Dispatch late Friday afternoon.
The article details how Historic Renovation Inc., a New Orleans-based company that has an ownership stake in the Renaissance Hotel in downtown St. Louis, informed bondholders last week that it will miss a US$3.5-million interest payment in December. If that occurs, the owners will be in default on US$98 million of debt, and the property will be ripe for foreclosure. According to the newspaper, bondholders are scheduled to meet with officials of Marriott International, the parent company of Renaissance that also manages the hotel, and HRI to discuss options.
The options include even possibly shuttering the hotel, which is an unlikely solution. Given the state of the economy and the dramatic decrease in business and leisure travel, there are tough times ahead for most hotels.
The Fishing for Solutions conference is the first industry get-together to deal with the fallout from the economic crisis. That it occurs as U.S. voters go to the polls to elect the country’s next president is ironic and appropriate. The next president will have his hands full trying to right an economic ship that is dangerously close to capsizing.
The hotel industry is a high-stakes business during any economy—but when that economy goes south, things in the hotel industry get ugly pretty quickly. Just ask the owners of the Renaissance Hotel in St. Louis.