There are a lot of smart people in the hotel industry who have figured out how to take advantage of any industry environment, even the severe downturn they endured for most of the past two years. A panel of them at this week’s Midwest Lodging Investors Summit in Chicago discussed ways to cash in on the coming rebound in the lodging market. Their collective message: go back to basics, explore every possible opportunity, use available capital wisely.

Bill DeForrest, president & CEO of Lane Hospitality, admits his company can’t and shouldn’t try to compete for every asset that comes on the market. His strategy is to focus on his company’s strengths.

“We always try to stay true to what we do best,” said DeForrest, who is also incoming chairman of the International Association of Holiday Inns. “We can’t compete with the pricing we’ve seen in the top markets so we look at secondary markets as a better alternative. Our goal is to own and operate the best assets in secondary and tertiary markets, but to do that you need to work all your relationships—with brands, other owners, banks, servicers and more.”

HEI Hotels & Resorts is a bigger fish, owning and operating more than 35 mostly upscale branded properties; yet it still needs to work hard to source and execute deals. According to Russ Urban, senior vice president of development, HEI spends a lot of time researching its own hit list of top 15 markets in which it wants to acquire hotel real estate.

“Dealmaking is more complex than it ever has been,” said Urban. “It requires a lot of patience to find the right deals for the right properties in the right locations and at the right prices. And you’ve got to have the discipline to walk away if pricing gets out of line.”

While many companies are seeking hotel transactions, a few are still developing. One of them is Hawkeye Hospitality, a Burlington, IA-based owner operator that has continued to build new properties throughout the downturn. Hawkeye has six properties under construction and opened nine in the past 18 months.

“Hunting for acquisitions is difficult in this environment largely because of the cash the REITs have to deploy, so we decided to continue to develop,” said Executive Vice President Ravi Patel, who says the company taps into USDA guarantees, the SBA 504 program and tourism guarantees where available to facilitate its development. “We use whatever means we can to drop bank exposure to 50 percent or less.”

Hoteliers on the panel also believe it’s possible to build profits and value through operations, even in difficult times. Morrissey Hospitality, a Minnesota-based management company specializing in independent hotels and restaurants, believes lots of opportunities lie in food and beverage.

“At times, brands can be a limiter to entrepreneurship in the hotel industry,” said President Bill Morrissey. “It’s important to find new ways to serve guests and generate additional revenues, and one way is through f&b, particularly if you can deliver a local flavor in your outlets.”

He gave several examples of ways to build revenues: One of his hotels, he said, does $500,000 a year in off-site catering, while another one offers upscale in-flight catering for guests with private planes. “These things build revenues, but they also help you create closer relationships with your customers,” he said.

Capital expenditures and brand requirements were other topics discussed by the panel, which was moderated by Mitch Miller of the Miller Law Group. As Urban of HEI pointed out, the brands have generally done a good job in the past few years in understanding the challenges facing many owners and the changing needs of guests. In many cases, they’ve allowed properties to defer required upgrades in order to preserve capital.

“As markets begin to improve, however, the brands will be back, asking for properties to meet these requirements and more,” he said.

Several panelists, including Morrissey and Vantage Hospitality COO & CFO Bernie Moyle, believe it’s important to deploy capital expenditures in areas that matter most to the guest.

“The brands need to listen to owners, who know their markets and properties better than anyone,” said Moyle. “Once renovations begin again, it’s important the money is spent sensibly in ways that really matter.”