HFS Banking On Worth Of Hotel-Sector Investment

BEVERLY HILLS, CA— Investors would do well to keep in mind the hotel industry— despite the rough road it’s traveled over the past year or so— “still offers better returns than many other real-estate sectors,” according to Steven Gold, managing director of Hotel Financial Strategies (HFS) here. In fact, it would seem an increasing number of investors (as well as hoteliers) are indeed mindful of just that fact. As a result, locally based Center Financial— after years of doing numerous hotel deals— recognized the likelihood for an increasing level of activity in this area and, as such, rolled out HFS to concentrate specifically on the lodging sector’s financial needs. With Gold and fellow Managing Director Garry Campbell heading up the lodging and hospitality finance entity as its operating partners, HFS has been formulated to handle all types of capital-market endeavors for the hotel industry… with the notable exception of hands-on sales brokerage. Moreover, as Gold explained, the firm’s main stock-in-trade is expected to be its commitment to “bringing a sense of urgency to the deal-making process.” As Gold told HOTEL BUSINESS®: “It’s a tough market out there today, but we believe it’s poised to get better. To that end,” he said, “there’s still lots of money out there [for hotels], provided you know how to correctly structure the deal. And a big part of appropriately structuring a deal today means working to what the markets expect… and demand.” In terms of expectations for the company itself, Gold suggested HFS should post about $250 million in new business by year’s end, and anticipates at least double that level in 2003. “We already have significant deal-making opportunity in the pipeline,” Gold noted, “and even in this admittedly tough environment, I just cannot conceive of not doing deals.” There are a number of paths by which HFS expects to reach its operational goals, including: its experience in creative financing; its long-standing relationships with lenders; and its commitment to explore new avenues of business development. Along the lines of this last commercial undertaking is the company’s newly formed joint venture with a subsidiary of PKF Consulting. In particular, this venture is set up to have HFS provide construction, bridge, permanent, equity and mezzanine financing for hospitality industry clients in need, as identified by PKF. Furthermore, Gold suggested PKF may also uncover sources of institutional capital that would find it to be in their best interest to use HFS in an investment advisory capacity. Finally, Gold said that HFS— as an operation— is still virtually in its incubation period. In fact, he said the company is still adding staff so it will be in a position to grow in tandem with the anticipated recovery and rebound in the industry and the capital markets.