PHOENIX, AZ— Lodging industry mergers and acquisitions aren’t dead; they’re just sleeping very soundly, according to several hotel executives at the Eighth Annual Lodging Conference held here last week. And this “nap time” just might last a bit longer than some would like. Colored by the observations and opinions of panel-members Robert Dockery of Jenkins & Gilchrist, Mike Leven of US Franchise Systems, David Vickers of InTown Suites and Bruce Wardinski of Barcelo Crestline, moderator Bjorn Hanson of PricewaterhouseCoopers was able to paint a picture of a potentially uncertain deal-making climate going forward. In fact, at times it seemed the assembled executives raised as many questions as they answered. For instance, in terms of possible acquisition and/or merger targets, Leven contended a brand like AmeriSuites should be a “prime” takeover candidate, while Wardinski maintained there’s still talk (and so far, that’s the extent of it) of a Hilton Hotels/Hilton International reunion. Briefly turning his attention to the public sector, Leven claimed he doesn’t see a lot of hotel REITs joining forces, mostly because their corporate structures are so small there are few economies and efficiencies to be gained. Meanwhile, Vickers offered he wouldn’t want to be involved with a public company at this time because of the veritable flood of litigation currently enveloping the corporate climate. On the other hand, he admitted, “Everyone gets sued… and the bigger you are, the more likely you are to be sued.” Looking ahead to 2003 and 2004, forecasts for deal-making activity included: Vickers suggesting there might be just seven or eight such transactions over the course of the next two years, but it’s possible one or two could be “really big;” Leven expecting about three (deals) per year, but he also maintained they could easily be bigger than those of the past year; Dockery anticipating three or four in 2003, and four or five in 2004, with the value of those deals rising slightly (unless some unforeseen major event skews the industry and the economy); and Wardinski suggesting “ a lot should happen next year, but it’s more likely to hold off until ’04 and ’05.” Summing up, Hanson said: “All the reasons and conditions are in-place for stepped-up activity in 2003, but cautious and depressed capital markets [to the tune of 50%]and egos and personalities [i.e. the feeling someone has to come out ahead in a deal] won’t let this marketplace bounce back until 2004 or 2005.”—Michael Billig
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