With more than 30 years in the hotel industry, Sam Winterbottom was an easy choice to help grow the hospitality practice of Grubb & Ellis. Winterbottom was hired in September as senior vice president and director of the real estate firm’s hotels, golf & leisure practice.

“Grubb & Ellis has spent the past 18 months expanding and elevating its service offerings with the addition of experienced professionals who can leverage the company’s integrated platform to better service our clients,” says Greg Coxon, president, brokerage services. “Sam has incredible industry expertise and relationships as well as insight into what our clients need from their real estate services provider.”

Winterbottom most recently served as CEO and president of eSuites Hotels, a technology-based lifestyle brand startup that stalled during the recent credit crisis. Before that, he spent four years as executive vice president of development for Carlson Hotels and 13 years at Starwood Hotels and its predecessor, ITT Sheraton, in various development and franchise capacities.

Winterbottom says he’s already heard from many of his former colleagues and is excited to get started in his new venture, despite the challenges ahead. He took some time to talk about his new position and where he sees the industry headed.

What are your main responsibilities in this position?

The goals are twofold: The first is to create and build a team for Grubb & Ellis of highly experienced hotel professionals, as well as build a toolbox of expertise and to leverage the larger platform to be ready to go to market when transactions return.

How does your vast experience in the industry help with this new role?

Clearly in all aspects of business, relationships are very important, and one of the advantages I have is that really for the past 15-plus years I’ve been on the transaction side of the business within the hotel space. I haven’t operated hotels since before then and really have been in the buy-sell side for the past 15 years. I’ve been both a buyer and seller using brokerage firms. I understand the brokerage space from the perspective of a buyer and seller and as an intermediary I can understand both positions and how they look at deals. 

You picked an interesting time to jump into this side of the business…

I think at the end of the day the timing is good because of the lull in the transactional side, which makes it a good opportunity to expand on an existing platform of Grubb & Ellis to build our expertise. It’s fairly exciting to have that opportunity in the full heat of the battle. It’s a good time to do this.

So has the industry hit bottom yet or where do you see this downturn going?

We all see the same stats and numbers…I think we still have a ways to go. At the end of the day our STAR numbers are still showing declines through October, albeit at less of a rate than two quarters back, but we have a ways to go to stabilize. I’m not sure when that will be. We’ll need the rest of this year and maybe the first part of next year to stabilize, and then after that it will improve.

Where is the money going to come from to get transactions going again?

Debt is not readily available at all. Bankers and pension funds or whomever have issues with their own portfolios and the second piece is when they look back at the operating numbers, they don’t see RevPAR stabilizing so underwriting is tough. Those factors combine to make me say lenders aren’t there now.

On the equity side, it is there, but they are waiting to see when and where the numbers will stabilize. Buyers are looking for sellers and sellers aren’t looking to sell. You won’t find anything but very distressed properties or sellers who have to sell. There are some fairly lean valuations and that’s part of the disconnect. Sellers want to look at the glass as half full, buyers as more half empty.

And that’s where you now come in, right?

Hopefully, but the disconnect is too wide and debt is too hard to find and that’s why transactions have grinded to a halt.

How does this downturn compare to the others you’ve been through?

Going back to the oil embargo of the late ’70s, I’ve been through the Big Three with the RTC (and the savings and loans crisis) and 9/11 and some shorter recessions. This one is different in amplitude and scale. It’s a global issue on the recession front and the general economy and bigger and broader than we’ve had in the past. And second, it’s all forms of lenders and debts affected, so it’s different in breadth of financial markets. The third piece is it’s deeper in that highly leveraged assets are more sensitized to the declines. All said, this is by far the deepest and broadest hit to the hotel business I’ve seen in my 30-plus years. And it’s across all segments.

Was it what ended eSuites Hotels?

We were on the cusp of closing financial packets to build these four hotels and the credit markets just weren’t there. One lender pulled back and another did and when that happened, the engines lost power and the boat stopped dead in the water.

Will there be another chance for something like that to take off?

I think in the hotel business there’s always a time and cycle that is receptive to innovation and new products. There will be a time again for that sometime in the future.