Here’s the hotel equivalent of E=MC².
Hotel value = NOI.
Hotel NOI has gone down 39.1%.
How much have hotel values gone down?
Answer: At least 39%, but actually could be worse since hotel values in another life (2007) were based on lower cap rates and bloated financing.
My personal thanks to Bruce Baltin of PKF in LA for his brilliant graph below- it shows how much worse NOI decline is than REVPAR.
1991 NOI decline 9%
2002 NOI decline 18%
2009 NOI decline 39.1% which is an all time record.
This is a tremendous amount of loss. How will it be handled and to what extent does it affect the economy? Recent economic news saying “we’ve reached bottom” must be speaking of the first bottom. That of a ‘W’ instead of a ‘U’ if you contemplate this information, Steve.
indeed it is a trememdous amount of loss and its ramifications are not yet fully apparent. My blog tomorrow addresses both the amount of loss and why it will be far larger than anyone anticipates.
Investors and lenders shouldn’t have been and shouldn’t value hotels assets off of NOI, at least not alone. A hotel with a negative cash flow today doesn’t equate to a worthless hotel.
A better, universally unstood metric, other than a direct capitalization rate, needs to be utilized to better value a hotel. A DCF isn’t the answer as it is to subjective, especially when it comes to sustained growth rates.
I basically agree and if you do find the “better universally understood metric” you will replace Steve Rushmore as the valur guru. Some hotels like the Four Seasons Exuma may be worth less than zero to the current owners as they have to feed millions just to keep the doors open forget debt service.
Did you get the blow up? I asked my assistant to send it.
Also with businesses still cutting travel and remaining in that mode into 2010, i think 2 additonal issue are at play;
1.the over reliance on the business traveller is also going to bite.
2. the over building due to cheap credit. As i travel i have seen hotesl popping up in places where there is no other supporting industries.
Good day thank you regarding your post.I definitely adore your site.Its very informative.Nevertheless I really want you to post how you put social bookmarking below your post.My partner and i like it due to the fact it’s a extremely thoroughly clean great blogger mod.
thank you extremely much
Hello thanks for your post.I actually enjoy your blog.Its incredibly informative.On the other hand I genuinely want you to post how you put social bookmarking below your post.I like it simply because its a really thoroughly clean cool blogger mod.
thank you really much
How’s things many thanks pertaining to your page.I definitely enjoy your web site.Its really informative.Nevertheless I truly want you to post how you put social bookmarking below your post.We like it mainly because its a extremely clean awesome blogger hack.
thank you incredibly much
OiJHKZ qtiajoentvkc, [url=http://evmgwzwqgzoc.com/]evmgwzwqgzoc[/url], [link=http://obfabaoqxjbw.com/]obfabaoqxjbw[/link], http://rfhxahqymqdr.com/
Gd8w1r nnhvcqqsfkqf, [url=http://ertuceylcwjh.com/]ertuceylcwjh[/url], [link=http://tjgcgfjeeosi.com/]tjgcgfjeeosi[/link], http://wnwgqdjefdxp.com/
i probably would not have believed this was handy a handful years in the past nonetheless its interesting how age switches the means by which you have an understanding of interesting concepts, thanks with regard to the piece of writing it is enjoyable to read something sensible now and then in lieu of the regular rubbish mascarading as information sites on the web, cheers
Hey! Great thought, but can this actually function?
CINDIE
It is an ironic habit of human beings to run faster when we have lost our way.