After two years of industry events being defined by talks of “cautious optimism,” attendees at the fourth annual Midwest Lodging Investors Summit in Chicago turned their attention to opportunity.

From the opening general “State of the Industry” session to breakout panels to hallways and the networking receptions, more than 300 attendees talked about more than just hope. They talked deals and opportunity, from areas of new development to strategies to secure financing, to a quickly recovering transaction market to brand strategies for growth.

Hans Detlefsen, managing director of HVS Chicago, said values have returned “quickest for the highest quality assets in gateway cities,” and Sanjeev Misra of Paramount Lodging Advisors added that hotel investment is returning to urban areas like Chicago.

As transaction prices have escalated in those top markets, speakers also talked about opportunities for new development in less likely locations like North Dakota, where revenue per available room is up approximately 25% this year, according to Jeff Higley of Smith Travel Research. It was leading the country in performance metrics this year, but Higley’s presentation showed almost every segment and nearly all of the top 25 markets have also seen significant improvements in occupancy and even average daily rate this year.

Northwest North Dakota, with its now booming oil business, isn’t alone with opportunity. Mike Muir of Wyndham Hotels said there are other pockets like that, driven by the oil and gas industry, in Montana, Western Pennsylvania, West Virginia and the Carolinas. For the same reason, Mark Williams of Best Western said Alberta, Canada has also been good for the membership organization.

Although Steve Kisielica, founder of Lodging Capital Partners, said “there are no markets that should support new development,” his company has found great success through acquisition. He said of the 45 properties they’ve recently bought, 43 have been significantly below replacement cost.

Ravi Patel, of Hawkeye Hospitality, disagreed to some extent. “I was a pro development guy three years ago, and that’s starting to pay off now,” he said. “If you have new properties opening now, you’ll do very well.”

Finding financing remains the challenge, but many speakers talked about opportunities with regional and local banks. Ron Burgett of AmericInn said financing is still out there for smaller projects, but it’s a tougher sell. “There’s a lot more education and work needed: Those smaller banks that are doing the lending don’t know the hotel business that well.”

Questions still remain, but industry expectations have no doubt risen. Caps rates, at historically low levels, continue to confound many, but it further exemplifies the robust recovery buyers are expecting. “They’re not so low compared with future expectations,” said Detlefsen of the exit cap rates being used to rationalize the prices being paid for many assets “It’s the disparity between the past and future, which is at its largest historic gap.”

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