Black Meetings and Tourism

Nov/Dec 2011

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NABHOOD NABHOOD SEES A REBOUND BY MICHAEL BENNETT LEAD STORY Things are looking up according to Andy Ingraham, presi- dent and CEO of the National Association of Black Hotel Owners,Operators andDevelopers (NABHOOD). After years of frozen creditmarkets and belt tight- ening by major lenders, Ingraham says, "there is no better time for acquisitions (of hotel properties) than right now." Why acquisitions, why now? In traditional business cycles, typically the best time to acquire properties is in the early stages of economic recovery. The sporadic nature of this particular recovery and the gyrations in the financial markets sug- gests a sluggish continuation of this trend, but there are good deals to be had for the savvy investors. It's not a stampede to the bank for Real Estate Investment Trusts (REIT), equity investors or fundmanagers, butmore of a slow methodical look at all options on the table, conducting proper valuations and other forms of due diligence and mak- ing smart investment decisions. But lenders are not just givingmoney away as loan to value ratios are still significant at 30 to 40 percent, but that's better than no movement at all. Still, low supply growth and low interest rates are fueling increased demand in the acquisition arena. Whatmakes a property ripe for acquisition? In addition to favorable credit terms Ingrahamsays great locations and great brand names are essential to the bottomline. It's actually cheaper to acquire properties and reposition them in the market than breaking ground on a new property. And that's an important distinction Ingraham empha- sized…new builds are costly and time consuming, especially in times of tight credit and the glut of existing properties in need of acquisition and turnaround. Another trend in the evolution ofAfrican-American hotel ownership is not actually owning a property,but rathermanag- ing quality properties. It's a great businessmodel and revenue 24 NEWS stream for those who already understand the nuances and complexities of ownership andmanagement. These third-party management companies are great alter- natives for the investorwho prefers amore hands off approach for whatever the reason. Many of the top hotel management companies such as Interstate Hotels and Resorts have owner- ship, management or a combination of both in their portfolio. Experienced hotel management teams bring outstanding resources to the table such as market understanding relative to location and market segment. They can assist owners in mar- ket evaluations, acquisitions, development, brand/site valida- tion, market studies, project financing and technical services. But above all else hotel management teams are responsible for the day-to-day operations of the brands and properties they represent. Their primary goal of course is operating efficiency and profitably for the investors and brands they represent. Ingraham pointed to Sheila C. Johnson, CEO of Salamander Hotels and Resorts, LLC as a pioneer in hotel management for Af r i c a n -Ame r i c a n s . Salamander focuses on four and five-star level hotels and resorts. Her team specializes in repositioning underper- forming properties, manag- ing major renovations, and providing critical input into the design and development process of ground-up projects. In a deal announced in June 2011, Salamander was selected to manage Sanctuary Cap Cana, a 176-room ocean front resort in the Dominican Republic. And last year Johnson sold the Woodlands Inn, just out- side of Summerville, SC but Salamander was retained as property manager. Another player in the hotel management arena is Norman K. Jenkins, CEO of Capstone Development, LLC and former corporate officer with Marriott International, Inc. Capstone has a redevelopment and management deal in place with Diplomat Companies to reposition the 137-room 3 Palms Oceanfront Resort in Myrtle Beach, SC. Both Johnson and Black Meetings & Tourism November/December 2011:

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