Traditional financing may be
difficult to secure, but hotel companies are looking for alternatives to keep
their growth engines humming. “While there is a complete lack of financing
today for new construction, some money is available for conversion projects,”
said Yoav Gery, Marriott’s senior vice president of boutique development, at
last week’s Lifestyle/Boutique Hotel Development Conference in Miami Beach.
Gery, speaking on a panel on boutique development opportunities, believes
financing will return “perhaps next year or maybe not until 2011.”
Choice Hotels, which has seen the
credit crunch stunt growth of its new Cambria Suites lifestyle brand, has become
proactive to help developers build the product. Brad LeBlanc, Cambria’s vice
president of development, told the audience the company is providing some
mezzanine financing and debt guarantees for qualified developers who want to
build Cambria Suites properties. “We’re also buying distressed hotel sites,
banking them and flipping them to developers when they’re able to build,” said
LeBlanc.
Of course, cash is always king, and
that’s certainly true in this environment. According to Troy Furbay, senior vice
president of acquisitions and development for Kimpton Hotels, the chain has a
$250-million private equity fund (about 10 percent of the funds have been used)
to buy properties for conversion to one of Kimpton’s products. “Given the
current environment, we believe Kimpton will become a consolidator of
distressed boutique properties,” said Furbay. “It’s not really a new strategy
for us as half of all existing Kimptons were conversions, mostly from uses
other than hotels.”
The discussion also gave the audience
a glimpse into the strategies behind Edition, the much-anticipated boutique
brand from a partnership between Marriott and Ian Schrager, the godfather of
the boutique hotel segment.
“Edition will be unique in that it
combines the coolness of Ian and levels of service no other brand or operator
but Marriott could provide,” said Gery. He said the first two Editions open
next year. “There are no specific standards for the brand other than they must
reflect their communities. The standards are all in Ian’s head, which allows
for a flexibility you typically wouldn’t find within a brand framework.”
