PHOENIX— If and/or when you face the prospect of a workout for your property, don’t bother talking to your primary lender because— odds are— it’s already too late to salvage the situation. Such was the sage advice offered up by a panel of workout-savvy industry professionals at the Eighth Annual Lodging Conference here, stressing the importance of speaking with your creditors as early as possible… and certainly well before any debt-service payments are missed. Tapping into the experience and expertise of Trigild’s William Hoffman, Remington Hotel Co.’s Doug Kessler, Jeff McIntyre of Gemstone Resorts International, Lodging Unlimited’s Richard Norton and Daryl Robertson of Jenkins & Gilchrist, Friday’s mid-morning session covered what and what not to do in the event of failing financial fortunes. Also on the agenda were a number of helpful hints for those facing this unappetizing reality. Perhaps foremost among those hints raised was the notation that a branded management contract is legally considered an “executor” contract and, as such, it can be rejected in order to allow a hotel owner to be able to sell a property unencumbered. Getting back to what a lender will and won’t “put up with,” Hoffman said: “Generally speaking, as long as you’re current on your debt-service payments, most everything else can be tolerated. However, once you miss a debt-service payment, everything comes up for scrutiny.” Moreover, the consensus was it is always better to be “up front” with your lender about your financial situation. As Kessler contended: “Hiding the ball won’t get you anywhere.” Of course, not everything shared during the session was cause for gloom and doom. According to McIntyre, when it comes to facing the specter of a workout, “there are very few lost causes.” As he put it: “There’s usually something you can do [to handle the situation].”—Michael Billig
