HB ON THE SCENE: Capital Ideas Take Center Stage At 14th Annual Meet The Money Conference

LOS ANGELES, CA— The lodging industry may be on its way toward a rebound, but such a conclusion was not quite so universally accepted by the strong turnout of lenders and other capital-market executives at this year’s edition of Meet The Money held here last week. Indeed, over the course of this high-intensity, one-day event, it seemed the notion held by many in the lending community with regards to the hotel arena’s performance turnaround falls somewhat short of the optimistic observations put forth of late by lodging analysts and market-watchers— at this 2004 conclave as well as at other recent industry gatherings. Jim Butler— chairman of the Global Hospitality Group for Jeffer, Mangels, Butler & Marmaro LLP— pulled together his usual line-up of lending luminaries, which in turn brought yet another overflow crowd to the West Coast for the 14th Annual Meet The Money Conference. And, despite the reality that a significant number of capital providers are still largely preaching restraint, the prevailing assessment at the close of this year’s conference was that a substantial number of deals were discussed— and hammered out— during the 24 hours spent on-site by the meeting’s participants. One of the first up to provide a heady glimpse of what promises to be the upside for the industry was Mark Woodworth, executive vp for PKF Consulting, who set the stage by predicting: “This is the year profit growth returns to the industry, slightly outpacing expenses.” Following up on this observations— albeit with something of a caveat— was the lunchtime panel of Winston Hotels Executive VP/CFO Joe Green; Barcelo Crestline Corp. President/CEO and Highland Hospitality Chairman Bruce Wardinski; and MeriStar Hospitality Corp. COO Bruce Wiles. Specifically, the consensus voiced was that the industry is recovering but is has to come down to the bottom line. Putting each of their remarks in their proper perspective, Green pointed out: “The cost of capital is coming down.” But be that as it may, Wiles warned: “Just because one can now buy assets more easily, it doesn’t necessarily follow that one should.” Continuing on in this cautionary vein, Wardinski maintained; “There’s still a risk to consider, especially if you’re thinking about selling in three – four years.” Finally, with their gaze firmly fixed on financing, the panelists probed the vagaries of today’s capital marketplace. As Wardinski noted: “[Today] is a great time to raise money publicly. As such, if it was up to me, I wouldn’t hesitate to use up my current equity and go right back out and raise some more.” Of course, there’s another side to that stance. As Green pointed out: “You still have to deploy that money wisely, no matter how easily it may have been raised.” Chiming in with the final word on the subject was Wiles, who contended: “We’ve [raised money through the public market]twice recently… and we’ve done so successfully. I’m a believer in the theory that when the window is open, you have to take advantage of it.”