NEW YORK— Financing is driving the hotel industry and its recovery was a frequently voiced observation during the course of last month’s NYU 26th Annual International Hospitality Investment Conference. Along this line, a number of leading executives in the industry’s driver’s seat maintained they could see few bottlenecks or detours on the hotel-funding road ahead. This largely upbeat observation was delivered within the framework of the latest in a continuing series of HOTEL BUSINESS® executive roundtable discussions— sponsored by Starwood Hotels & Resorts Worldwide. Specifically, this gathering of money-marketers brought to the table: Winston Hotels President/CFO Joe Green; Ashford Hospitality Trust President/CEO Monty Bennett; CW Capital Senior VP Jim DeAngelo; RockBridge Capital Managing Director Jim Merkel; Sam Merchants, managing director for The Merchants Financial Group Ltd.; GMAC Commercial Mortgage Corp. VP Bruce Lowrey; GE Real Estate Managing Director Mark Lanspa; and iStar Financial Executive VP Dan Abrams. Mapping out a general assessment of the lodging arena current status, Lowrey started the good news ball rolling by noting: “The lodging product is in vogue right now [among financiers and investors]as it’s perceived to be on an upswing. Accordingly, there’s lots of traditional— as well as non-traditional— debt chasing lodging opportunities today.” Taking only slight exception to Lowrey’s view was Bennett, who suggested not every segment of the capital marketplace is necessarily overly enamored with hotels. “CMBS lenders [for instance]don’t really like hospitality’s risk,” Bennett said. On the other hand, DeAngelo countered that perception with his own notation that “default rates [for hotels]have not been very bad at all.” As such, he advised the lodging industry would not be out of place if its borrowers should “look for underwriting to loosen” in the months ahead. Then again, a line of thought advanced by Lanspa suggested: “[Lenders] should rightfully be concerned about leverage levels going in. “Will there be an increase in defaults rates sometime in the near term… especially where larger assets are concerned?” That is not to say some of the financing executives were not trying to find a way around this possible sore spot. “We’re consistently looking for the right sponsorship, and when we find that, we similarly find most everything else falls neatly into place,” Merkel said. “Additionally, we’re also willing to work with other groups providing other pieces of the capital structure.” Taking this to his level, Bennett avowed Ashford looks more at the asset itself when considering lending feasibility. “We strongly believe there are more real-estate factors to consider than just sponsorship,” he said. The last word along these lines was forthcoming from Abrams. “Some assets are getting harder to underwrite. Accordingly, over time, we’ve found it’s less of a single-most important factor [to consider]and more of a group of factors that come into play,” he said. As for what this group-wide assessment means for those expecting to be active players in the industry, Starwood Real Estate Group President Ted Darnall said he sees the stage being set for more acquisitions as well as new construction. “In the last 90 days, we’ve seen a steady rise in interest regarding new construction… so much so opportunity funds are even beginning to look here,” he said. However, Darnall clarified matters a bit by pointing out loan-to-cost and loan-to-value remain as most important considerations. Accordingly, he said it is a combination of senior and mezzanine debt helping to spur this interest… and it is the rising cumulative percentage of that combined debt helping to drive Starwood projects now breaking ground. Adding his voice to the mix in the name of new-supply reason, Merchant suggested: “One way to keep [excessive]development in check is to keep debt-service and equity ratios in line.” As he further noted: “Ba
