Hotel Business Journal Jan 2009 : Page 1Supplement to Hotel Business® JANUARY 2009 TM ICD Publications quote of month “ a lot worse. could have hotel loans 1990. Today, lenders are totally and completely in either play by or you don’t borrow their money. ement to Hotel Business® JANUARY 2009 TM ICD Publications quote of month “ a lot worse. could have hotel loans 1990. Today, lenders are totally and completely in either play by or you don’t borrow their money. First First nt to Hotel Business® JANUARY 2009 TM ICD Publications quote of month “ a lot worse. could have hotel loans 1990. Today, lenders are totally and completely in either play by or you don’t borrow their money. First Treasure Treasure Island deal jolts quiet market BY BRUCE SERLEN LASVEGAS—LasVegasmaybe suf- fering through a downturn at the momentin terms of hotel occupancy and gaming revenue, but as the bell came close to running out on 2008 last month two heavy hitters still stepped up to the plate in what is likely to be thenumberone, highest- price hotel transaction of the year. Wichita, KS, entrepreneur—and Las Vegas veteran—Phil Ruffin agreed to pay $775 million to acquire the 2,885-room Treasure Island Hotel &Casino fromMGMMirage. continued on page 7 oneonone with Andrew Sims, president, CEO and chairman of Williams- burg, VA-based MHI Hospitality Corp. Q: Considering everything—the tu- multuous financial sector, the re- cession and tumbling stock prices—how did MHI Hospitality end up in 2008? After all, hotel REITs, such as your com- pany, were hit particularly hard in terms of bythenumbers 10 20 30 40 50 0 J J J J J J J J J J J 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 0 Volume J Price per Key ($) SOURCE: Jones Lang LaSalle Hotels Following record high hotel transaction vol- ume years that only grew in size from 2004 through 2007, deal vol- ume tumbled down to about $8.5 billion for deals totaling $10 mil- lion or more in 2008, ac- cording to Jones Lang LaSalle Hotels. In 2009, it will be more of the same, with possibly a slight uptick. Conse- quently, the once-active negotiation tables will remain primarily vacant throughout what prom- ises to be another diffi- cult year for deals, with little in the way of debt. For $775 million, investor Phil Ruffin found a path to Treasure Island ownership in Las Vegas. their stock prices in the past few months. terms of our product.We had a cou- ple of acquisitions and we also turned our focus inward on relicensing all our hotels and carrying out extensive [product improvement plans] with various franchise companies. Half of our inven- tory has been under some form of renovation with the idea that we would have our product in excellent condition by the end of [2008]. The bad news is that had a little negative effect on oper- ating metrics. All in all, through October, they were pretty good, but the last few weeks things A: us it was a pretty highly charged growth year, actually.We have a lot have fallen off drastically in most markets, but some are holding up. ket will perform? riding that train. But given where our product is in terms of condition and no debt maturities coming up for three to four years and no extensive capital expenditure requirements continued on page 7 Q: A: Plasencia revives distressed practice BY BRUCE SERLEN TAMPA, FL—In response to the needs of the indus- try, the Plasencia Group has revived its distressed hotel advisory practice, an active part of the firm dur- ing past recessions. Lou Plasencia, TPG’s chairman and CEO noted, “Our advisors are responding to those lenders and investors who are requesting our counsel as related to their troubled hotel loans and investments.” Lou Plasencia Plasencia Group in all, it’s hard to be an optimist 2009 given where the economy is, What are your preliminary thoughts how MHI Hospitality will fare in and how the larger hotel mar- “ Price per Key ($) Volume ($B) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008F 2009F Publication List |
