Last time, I wrote some tips for busy hoteliers looking to save some time executing social-media strategies. Let’s say you have the basics under control, but now you’re looking to stay ahead of the curve and your competition by reaching new audiences with the latest social-media platforms. Pinterest and Instagram are the latest big social networks making a splash, and both provide opportunities for the travel and leisure industry to boost engagement.

What is Pinterest?
If Pinterest is not already on your radar, then it should be, as Pinterest’s rapid social media popularity is a compelling reason to join. For instance, Pinterest’s unique visitors have more than tripled since April 2011. At the end of February 2012, more than 15 million unique visitors were exploring Pinterest boards.

With nearly 20 million unique visitors, Pinterest certainly is a site people are visiting frequently. But is it an engaging site? According to Statista and comScore, it is one of the more engaging sites online. An average visitor from the United States spends an average of 97 minutes per visit on the site; global visitors are spending 89 minutes on Pinterst per visit.

The reasons for getting started with Pinterest are compelling—getting your content and hotels in front of a new set of travelers, driving bookings back to brand websites and getting the search-engine optimization benefits of inbound links to boost search-engine rankings—but there are roadblocks in place, similar to when brands first started getting on Facebook and Twitter. Many hoteliers have the same query, wondering, “As a hotelier, what do I actually do with Pinterest?” Here’s a step-by-step guide to getting started.

Step 1: Get on Pinterest

If you’re the one executing your Pinterest strategy, you’ll have to know what’s going on. So, the first step is to request an invite, then create an account and sign in. Then poke around and get the feel for what other people are pinning, what kinds of things get re-pinned most and how people communicate on Pinterest.

Step 2: Set up relevant boards

“Our Hotel” is boring because it’s very inward facing. Instead, create boards that embody your brand. If you’re an environmentally friendly hotel, make boards about the outdoors. If your gardens are second to none, create gardening and horticulture boards.

Step 3: Allow user comments and pins on your board

Step 4: Follow others

Find other users to follow in relevant categories including people/brands who pin items about hotels, the city where you’re located, art, food, interior design, weddings, gardening or any other relevant categories.

Step 5: Try hosting a contest

For example, run a contest that asks users to create a board that showcases the experience they had at your hotel.

Your guide to Instagram
Instagram, which has generated a whopping zero dollars in revenue, recently was acquired by Facebook for $1 billion. While some brands already are on the platform, many have yet to dip their toes in the photo-sharing websites social-networking pool. Naturally, this massive sale caught the attention even with those unfamiliar with Instagram, but there’s still time to make an impact before the platform gets saturated with companies. Instagram is a fairly simple application: you take photos with your mobile device, select a filter from a variety of options, tag your location (if you want) and share those photos to Facebook, Twitter and Instagram’s platform. Instagram’s filters can make any photo look great, which is why it has been dubbed “the autotune of photography.”

Step 1: Take interesting photos

Maybe you’re marketing an incredibly beautiful hotel with immaculate gardens, carefully planned pool, food presented in an interesting way, colorful cocktails and so on. All of these things can contribute to an interesting Instagram feed. What you don’t want to do is take picture after picture of your guestrooms—people on Instagram get turned off quickly by overtly sales-oriented material. Even taking pictures featuring the city that the hotel is in can help boost engagement.

Step 2: Follow others

Instagram allows you to find friends based on your contact list, Facebook friends and Twitter followers; you also can search for specific people. The easiest way to get started is to follow your Twitter and Facebook friends that already have connected with your hotel’s Twitter feed and Facebook profiles. After this, simply double-tap pictures to like them. Your followers will notice you liking their content, and if you’ve followed the first step, you should already have interesting content for them to engage with.

Step 3: Integrate Instagram with your web presence

Although it’s still in its infancy, Instagram does allow third-party applications. One of the best for brands is Followgram.me. This app provides web-facing Instagram photos that people can view and share. Here’s Ikea Italy’s stream, for instance. Widgets can be placed on your websites for people to see new images of the hotel, your grounds and the surrounding city.

 

Pinnacle Advisory Group’s Rachel Roginsky (left) and HVS’ Anne Lloyd-Jones smile as panelists are introduced during HELP’s opening general session.

 

BOSTON—The U.S. hotel industry will continue building on the momentum gained during the past several months, but the prospect of weakening demand looms, panelists said Wednesday during the inaugural Hotel Equity and Lender Perspectives conference in Boston.

The recent uptick in leading economic indicators bodes well for the immediate future of the industry, Mark Woodworth, president of PKF Hospitality Research, said during the opening general session. The data shows demand is likely to show growth in hotel demand in the late third quarter this year and stretching into early 2013. Year-to-date through March, demand is up 4.1%, according to data from STR, parent company of HotelNewsNow.com.

Revenue per available room and average daily rate was up 7.9% and 4% year-to-date through March, according to STR.

Rachel Roginsky, principal with Pinnacle Advisory Group, said the upward trend should continue. “So far so good is our theme,” she said.

Adding to the positive outlook for hotels is the low supply story. The number of active development pipeline rooms in March was down 9.7%, according to STR.

While some development projects have made headlines recently, David Loeb, senior research analyst with Robert W. Baird & Company, expects supply to remain muted. “Press releases are essentially warning shots,” he said. “Don’t build your hotel here. Press releases are not breaking ground. … I think (pipeline growth) will be pretty tame.”

Further, Loeb said the Baird/STR Hotel Stock Index has shown that hotel stocks have outperformed the market.

With all the things the hotel sector has in its favor, Loeb said he’s most surprised by the reluctance of revenue managers to raise rate more than they have.

“Those of you on the rate-setting side of the business, you guys are wimps,” he said. “You can do better.”

Long-term outlook
The steam behind the hotel industry’s recovery won’t last forever, and one panelist said the long-term outlook shows signs of weakness.

Anne Lloyd-Jones, managing director, HVS Global Hospitality Services, said demand will weaken through 2016. HVS data shows demand slowing to 1% growth in 2016, down from a forecast of 3% this year. HVS also forecast ADR growth to slow to 3% in 2016, down from an expected 5.5% in 2013.

STR forecasts demand growth of 2% during 2012, slowing to 1.8% growth during 2013.

The sentiment from the panelists was one of optimism, however.

“There are reasons to be concerned, and there are reasons to be positive,” Woodworth said. “The positives outweigh the negatives.”

Transactions outlook
As the sector’s performance has improved, the hotel transactions market also has heated up, the panelists said. For the 15-month period through March, Woodworth said a total 225 hotel deals of more than $10 million were consummated. These deals, at an average price per room of $210,000, represented a total volume of more than $12 billion.

Nearly a quarter of these deals took place in the top coastal gateway markets of New York; San Diego; San Francisco; Miami Beach, Florida; and Washington, D.C.

Also, Loeb said hotels owned by real-estate investment trusts, which have increased their acquisition activity of late, represent approximately 70% of U.S. hotel rooms.

“You cannot imagine the voracious appetite of the public companies to buy real estate,” he said.

There is “tremendous upside” for hotel deals, Lloyd-Jones said. An increasing amount of financing—and the low cost of that financing—is contributing to a climate conducive for hotel transactions.

Potential challenges
As rosy as the hotel sector appears, there are potential roadblocks, the panelists said. They include the political climate and economic volatility.

Woodworth sees the biggest threat to U.S. hotels being in the form of federal policies, including health care reform and the expiration of tax cuts enacted by former President George W. Bush.

As for economic issues, the panelists largely downplayed the effect rising gas prices might have on the hotel sector.

“People are over the shock of $4 a gallon,” Lloyd-Jones said.

Loeb said travelers feel they are entitled to a vacation and won’t necessarily let high gas prices prevent them from hitting the road.

Future IPOs?
The panelists also delved into other areas. Panel moderator Jeff Higley, VP of digital media and communications with HotelNewsNow.com, STR and STR Global, asked Loeb when Hilton Worldwide will go public.

Hilton’s initial public offering could occur soon, perhaps next year, Loeb said, adding the IPO could see Hilton broken up into multiple, separate public companies.

“We love Hilton so much, why not have two of them?” Loeb asked.

Also, Loeb said a La Quinta IPO could be in the cards, too, but would likely happen after Hilton goes public. La Quinta has debt issues to resolve first, he said.

REPORT FROM THE U.S.—In a landmark ruling that has its roots in the hotel industry, the U.S. Supreme Court has found that secured creditors cannot be denied the right to credit bid for their own assets.

The ruling stems from Radlax Gateway Hotel LLC, et al. v. Amalgamated Bank. At issue was whether lenders should have the right to purchase their own collateral at bankruptcy auction by using debt, a process known as credit bidding.

The dispute surrounds the proposed auctions of a pair of hotels owned by entities of River Road Hotel Partners LLC—the InterContinental Chicago O’Hare and the Radisson Hotel at Los Angeles Airport—which declared bankruptcy in August 2009. Court filings show River Road had secured stalking horse bids totaling $89.5 million for the properties.

But before the transactions closed, Amalgamated, the principal secured lender for the hotels that court documents show is owed in excess of $161 million, objected to the bid procedures on 8 July 2010, stating the bank was not given the opportunity to credit bid, a tactic that courts were split on allowing.

Associate Justice Antonin Scalia, delivering the opinion of the court, said River Road attempted to “confirm a 'cramdown' bankruptcy plan over the bank’s objection.”

“The debtors’ reading of (U.S. bankruptcy law) is hyperliteral and contrary to common sense,” Scalia wrote. The decision was nearly unanimous, with only Associate Justice Anthony Kennedy not taking part in the decision.

View the Supreme Court’s opinion.

In an emailed statement, officials at Amalgamated said the decision strengthens the bank’s ability to be repaid and allows the company to proceed with its plans for the Radisson Hotel at Los Angeles Airport, for which it provided a $142-million loan to be used for a renovation of the property and the construction of a parking deck. That loan will eventually be worked out, according to the statement.

David Neff, an attorney at Perkins Coie who argued the case before the Court on behalf of River Road, is “disappointed” in the decision.

“We think it limits the opportunity Chapter 11 debtors have to confirm financing over the objections of secured creditors,” he said. “Obviously, that would include hotel owners on the bankruptcy level.”

In June 2011, the U.S. Seventh District Court of Appeals ruled that, absent consent, secured creditors cannot be denied the right to credit bid when a reorganization plan proposes a sale of encumbered assets free and clear of liens and security interests. That decision went against a ruling from the Third and Fifth Circuit Courts of Appeals.

REPORT FROM THE U.S.—The ebb and flow of seasonality can be cause for much angst among hoteliers. However, having a distribution strategy in place to combat shoulder seasons while capitalizing on peak periods can help maintain healthy levels of demand, sources said.

“The best way to deter a bad season is to build around it,” said Paul Wood, VP of revenue management for Greenwood Hospitality Group.

“Be proactive and take measures against it. If you know the first quarter is going to be bad, steal demand or shift demand back on the third or fourth quarter. Have promotions in place, book transients and have marketing materials ready so you’re able to communicate and market to the public,” he said.

Hoteliers should be aware of all channels available to them, as well as looking at the local-market demand that online travel agencies bring to the market. From there, the best practice is to find the optimal channel mix, especially during shoulder periods, instead of discounting rates, said John Hach, senior VP of global product management at TravelClick.

“Hoteliers that lower the rate have a problem because they’re lowering profitability for the hotel. They’re not bringing in new travel, they’re just redistributing demand that will come in anyway,” he said.

Partnering with OTAs, especially when it comes to pricing, helps hotels to not have to sacrifice retail rate, Hach said.

The benefits of using opaque channels and packages means the “consumer doesn’t know the individual parts. The hotel has an advantage. People don’t know the value. On (its) own, the hotel is exposed without a bundle. The lower price will drive the market down. The benefit from having that package price is that it’s harder to determine hotel value within that bundle,” he said.

“The trick is during demand or high season, you can yield price and fine-tune promotions and maximize revenue on all channels. Off-season strategy changes; promotions and discounts should reflect more value,” said Chinmai Sharma, VP of revenue management at Wyndham Hotel Group.

But never discount irrationally, he said. Discounts should add incremental value.

Traci Mercer, VP of market management for Expedia, said the challenge during peak season is to yield the highest return.

“The No. 1 fundamental rule: Don’t turn off a marketing or demand channel. Leverage that channel to drive demand during peak season. Leverage lengths of stay, and keep as much demand as there is to ensure that you’re hitting your goals.”

During shoulder periods, “You can’t create demand,” Wood said, “but shift it.”

To do this, Mercer said hoteliers should look at hotels within their competitive set or overall marketplace to see if there’s a customer base they can target and shift demand to their hotel. OTAs such as Expedia, she said, can see where customers are booking, where demand is being aligned and how to satisfy those needs.

Hach also said understanding the vacation schedule is key. The leisure segment in the United States is stimulated by family and when children are out of school, usually from June to Labor Day, he said.

OTAs captured the largest share of demand during the 2010 summer season, according to total channel demand data from STR, parent company of HotelNewsNow.com.

Bookings made through the merchant and opaque models increased during the 2010 summer season, while those made through the retail channel remained steady, according to STR data.

Get ahead of trends
Because seasonality is variable, often fluctuating based on various events, group or transient bookings, hoteliers should know “the biggest thing is not keeping up and understanding the trends,” Wood said.

“Past data is really important,” Sharma said.

Market trends are so dynamic that Sharma advised not to look beyond one or two years. “The trends used to be so steady, but given what we’ve seen in the past four to six years, hoteliers can’t rely too much on history but on current trends,” he said.

“The key is to look at the market build 30, 60 and 90 days out,” Hach said. “… The key takeaway from hotels is to invest in business intelligence with forward-looking data. It allows (hotels) to look at seasonality trends,” in the market.

In fact, looking at the broader picture, outside of shoulder and peak periods, is also conducive to understanding seasonality, Berry said.

“If our horizon is so short that we’re making decisions for a month or a week, we’re making some kind of price decision that will inevitably hurt us and hurts market pricing over the long term,” he said.

“Make smart long-term decisions, which may result in taking short-term pains in anticipation of long-term gains,” Berry said.

“The trick is to plan as much in advance as you can,” Sharma said. “… In the busy time, the lead time can be shorter and doesn’t need planned so much—there’s enough demand. In lean times, you need to plan in advance; plan six to eight weeks out in lean times.”

TravelClick’s Hach shared a similar sentiment. “Hotels need to know what their average lead time is for reservations. It helps (them) have crystal-clear decision making,” he said.

Knowing this will help “hotels take proactive steps opposed to reactive steps,” he said.

Copyright © 2004-2011 Smith Travel Research /DBA

GLOBAL REPORT—The launch of several “hotel friendly,” lower-commission online-travel agencies is unlikely to impact the existing commission structures of established players such as Expedia, Orbitz and Priceline, according to experts.

The founders of the recent entrants, however, are betting they can make a splash.

The past year has seen a swell of such low-commission players, including the Asian American Hotel Owners Association’s Mybesthotelrate.com, Tom and Melissa Magnuson’s Global Hotel Exchange and the brand-led Room Key.

 

Max Starkov

Each has generated its fair share of buzz, but they lack the critical mass or marketing clout needed to compete in a crowded distribution space, said Max Starkov, president and CEO of Hospitality eBusiness Strategies.

 

What’s more, they lack the value propositions necessary to make an impact, he said.

“When you look at any such player in the distribution space … you have to look at it from both the travel-supplier perspective but also the travel-consumer perspective,” Starkov said.

The new platforms benefit suppliers with lower commissions or fees. Mybesthotelrate.com and Room Key charge commissions of approximately 10%, according to reports, while the Global Hotel Exchange is free to hoteliers—it’s funded by a US$2.99 service fee charged to consumers for each booking. OTAs can charge upwards of 20%, Starkov said.

But what’s the benefit to consumers?

“When I look at it, there are none at this point,” Starkov said. “That’s my main concern. If I am a travel consumer and over the past 17 years already I’m using Expedia or I’m using Orbitz … or if I’m brand-conscious and I’m very loyal to Marriott and I’m using Marriott.com, why am I using Room Key? Where is the value proposition?”

Tom Magnuson, who is CEO of both the Global Hotel Exchange and Spokane, Washington-based membership group, Magnuson Hotels, said the value proposition is in knowing exactly what customers want: simplicity in booking.

“People know what they want, when they want and how much they want to spend, and they want to get in and get out,” he said.

When travelers enter a search for a 3-star hotel in Cleveland within X miles of the Rock and Roll Hall of Fame and Museum, they don’t want 300 choices, Magnuson gave as an example. “I want five or six that exactly match,” he said.

But Starkov said simplicity might actually be working against Global Hotel Exchange and other low-commission OTAs.

“People don’t want simple; they want information,” he said. “The information-rich OTA actually has an advantage here. People book a room within the context of the destination—period.”

Further amplifying matters is the lack of marketing clout, Starkov said. The heads of Mybesthotelrate.com, Global Hotel Exchange and Room Key have very publically outlined a route of frugality when it comes to TV and Internet advertising spend.

“It’s a very expensive proposition,” Starkov said of establishing a new brand. “We’re talking about multimillion dollars to even remotely establish any kind of brand, especially in the travel space, which is perceived as already overcrowded. I don’t see these guys having the resources to build brand awareness.”

Based on public records of spending from U.S. Security and Exchange Commission filings, Expedia and Orbitz spend approximately one-third of their revenue on marketing and selling, with operations being closer to 20% of revenue. This is in contrast to the amount a hotel spends, which is approximately 10% to 12% of its revenue on marketing and 35% to 40% on operations, according to the “Distribution Channel Analysis” study, which was published by the Hospitality Sales & Marketing Association International Foundation. STR, parent company of HotelNewsNow.com, provided data for the study.

But Magnuson points to other brands that have caught on without a major marketing spend.

“Marketing for Global Hotel Exchange is just going to be the idea,” he said. “Google didn’t need any marketing.” The same was true for Magnuson Hotels, which caught fire nearly a decade ago based mostly on positive word of mouth. The membership group now has 2,000 hotels in the U.K. and North America, Magnuson added.

And early signs suggest Global Hotel Exchange, along with its lower-commission peers, could experience similar growth.

Failed attempts
But while momentum might be in the favor of the lower-commission players for the time being, previous attempts at similar models suggest the new entrants face a rocky road ahead.

Before Room Key, for example, several major brands joined in support of TravelWeb.com. Debuting in 1994, the platform was the first real-time hotel booking reservations engine online. The site was built by Pegasus, who in 2000 joined with Hotel Distribution Solution, a consortium of five major chains. Numerous factors led the site’s owners to sell the platform to Priceline.com a few years later.

WorldRes.com was another less-than-successful attempt. The distribution platform charged hotels approximately 5% commissions but lacked a value proposition to set it apart in the eyes of consumers, Starkov said. While WorldRes.com still is a functional site, it comprises an exceptionally low share of overall online bookings, Starkov said.

“They were merely online agencies that were friendly to the hospitality industry as opposed to OTAs. And where are they today? Nowhere,” he said.

OTA commissions holding strong
Executives at Expedia, for one, have no plans to lower the OTA’s commission structure, regardless of what new distribution platforms emerge on the scene.

“Expedia is committed to ensuring that our compensation levels are in line with the value that we deliver to our hotel partners,” said Melissa Maher, the company’s senior VP of global strategic accounts and industry relations.

That value includes more than just the ability to distribute rooms, Maher emphasized. Rather, it includes a high volume of demand, a vast international reach, multiple channels within in a single marketplace (Expedia offers several distribution methods, such as opaque, package, standalone and seasonal), marketing and support from dedicated market managers.

Factor in all of those services on top of the traditional 10% commission the hotel industry has adopted for third-party sales through all travel agents, and the OTAs feel justified in charging commission upwards of 20%, 25% and 30%, Starkov said.

The next big competitor?
While Mybesthotelrate.com, Global Hotel Exchange and Room Key attempt to cultivate their respective consumer bases, Starkov thinks the biggest threat to standard-commission OTAs is already flexing its muscle: Booking.com.

The Priceline-owned distribution engine is the biggest in Europe, with more than 55% market share of all online bookings in the region.

The site runs on a pure agency model: Guests search for hotel rooms on Booking.com, which passes credit card information and other key data to the hotel direct. The hotel charges the guest’s credit card on arrival and pays Booking.com a 15% commission after the fact.

The OTA’s success in Europe was bred from the region’s lack of brands. Without the likes of Marriott or Hilton providing hoteliers with global reservation engines, Europe’s independent hotel owners turned to Booking.com’s simple and affordable distribution platform to keep pace in the Internet age, Starkov said.

Booking.com already has expanded into the U.S., primarily on the West and East Coasts where international inbound visitors are most likely to travel. But the OTA’s executives have their sites on the entirety of the U.S.

“In the U.S., Booking.com is expanding its business rapidly with offerings that are very competitive with other online hotel reservation services,” Booking.com executives said via an emailed statement. “Many of the Booking.com hotels are offered on a ‘pay at the hotel’ basis, which is attractive to travelers who prefer not to pay for their rooms up-front. Also, many of the published-price hotels available on priceline.com are sourced from Booking.com.”

“If Priceline succeeds in that, this will automatically work against the OTA merchant model,” Starkov said.

BOSTON—There’s a simple indicator to know when construction financing is in full bloom again for hotel developers, according to Christopher Jordan, executive VP and group head of the hospitality finance group for Wells Fargo & Company. It’s all about the continued comeback of commercial, mortgage-backed securities.

“The catalyst for more banking interest in construction is when the CMBS market heats up and disintermediates the bank markets,” Jordan said during a Hotel Equity and Lender Perspectives conference session about getting large deals done. “When underwriting gets more aggressive and hotel (net operating income) cash flows can be traced to prior peaks so you can pull out proceeds and the CMBS really takes share, that’s when the bank market, by the process of elimination, gets forced into more construction lending to create revenue.”

 

Archon Capital’s Barry Olson said he is beginning to hear more conversations around the country about hotel-construction financing.

That scenario isn’t imminent, so what should the industry expect in the meantime?

 

“Until then, it’s still going to be limited, choppy, hit or miss,” Jordan said.

“Macro-wise it’s not heading in that direction for the banks,” said David Harris, director of global real-estate investment banking for Deutsche Bank Securities. “There’s a lot of regulation. These kinds of risks are really being frowned upon by ratings agencies.”

Construction debt continues to trickle from a nearly bone-dry tap, and lenders have good reasons to keep it that way, according to the panelists. But also there could be thirst-quenching libations in the offing for developers.

“From a risk-adjusted process, what do I need to charge for a construction loan to make sense?” said Barry Olson, managing director and COO at Archon Capital. “If I’m going to have to charge an appropriate rate for a construction loan with my book, it’s going to crush the construction loan because I’m not going to make money on it for three years. Mathematically I’m not your guy.”

“Our next fund, we might think about it but not in our current fund structure,” he added. “We’re seeing locations around the country where the conversation is out there. It just doesn’t fit for us this time.”

"How can we play in that space if we’re really trying to get 8s, 9s 10s (debt yield) for the whole loan?” said Stuart Silberberg, managing director for Starwood Property Trust. “Someone looking at a traditional construction loan with pricing in the 4, 5, 6, 7% range, A) it’s not likely to be us and, B) it’s probably a harder market to find non-recourse construction lending like that.
Sponsorship is key, but we’re not there yet. The market is getting there. There will be people who will go after yield on the construction lending side in six months or less.”

Harris said it’s a simple case of CMBS lenders getting comfortable with the idea of extending their position on the risk spectrum—and no one is sure when that comfort level will be achieved.

Cash flow determines a lot
That leaves the acquisition market as the primary driver of hotel debt. Again, NOI is king when those deals are considered and trailing 12-month performance is the governor.

“We use first-year underwritten cash flow,” said Timothy Kenny, managing director, Cornerstone Real Estate Advisers. “We’ll assume that there’s growth there, depending on what market and pent-up demand, we may use 5% growth rate. In some deals where a new owner comes in and the hotel has been mismanaged, we’ve used 7% or 8% growth rates.”

“Historically trailing 12-month cash flow is probably the chief metric, but we will lean forward, we will look at what is the business plan and in virtually all cases our clients have a well-thought-out business plan to extract value,” Jordan said.

He cited the Liberty Hotel in Boston as an example. Wells Fargo spent a lot of time with the borrower last year and the eventual loan came in at a little over 7 in-place debt yield, Jordan said.

“The hardest thing for this group is what kind of growth rate you use going forward,” Kenny said. “We’re not using the 8 to 9% (revenue per available room) growth we saw on charts yesterday (during a general session), but we want to be realistic. If you use a straight 2% or 3% growth rate, a lot of these deals you can’t get to work.”

There are other metrics in play as well.

Jordan said in addition to T12 cash flow, Wells Fargo looks at debt yield, loan per key and replacement costs as some of the other metrics in play.

“We try to triangulate between those metrics and not get singularly focused on one metric,” he said.

Harris said paying attention to what ratings agencies are saying is essential when dealing with securitized debt.

“Where we get a little more flexible is when we are using our balance sheet,” he said. “We can take a look at assets that have incredible per-key value propositions and make loans. We can write to very high loan-to-values, even 80, 85%. There’s going to be a cost to that kind of capital.”

There is liquidity out there
Jordan said there’s more liquidity in the market even though European financiers, who traditionally have been active in the hotel space, have retreated completely or provide only capital with high costs.

“Net-net there is higher liquidity,” he said. “We see more generalist real-estate lending groups out of the domestic banks dabbling in hospitality.”

That’s a good omen, according to moderator Robert Stiles, executive managing director, Cushman & Wakefield Sonnenblick Goldman.

“For borrowers, if you get more people dabbling, that’s good news,” he said.

Kenny said some insurance companies are getting back into lending B pieces and “hotel financing is typically 75 to 100 basis points wider than other loans we’re doing.”

Silberberg said the pace has picked up for large hotel deals that are more than $25 million.

“Today we see hotel deals getting done for 9, 10, 11 on the debt-yield side, depending on the type of the deal,” he said. “It’s much tighter than it was. It’s bringing a lot more hotel paper into the market … all the uncertainty that was in the last six months of the year lifted a little bit; there was a flood of hotel deals that came our way.”

He projected that approximately 40% of the debt volume SPT will engage in this year will be in the hotel industry.