With the U.S. economy battered by the credit crisis and jobs continuing to evaporate, a somber mood permeates the Americas Lodging Investment Summit in San Diego. But while the recession will continue to suppress both leisure and business travel, some hotel companies see this down period as an excellent time to do business while their competitors sit on the sidelines.
Concord Hospitality Enterprises is continuing to develop hotels, and recently secured a $13.4 million loan to build a 124-room Courtyard by Marriott in Pittsburgh, a market that is outperforming many cities in the U.S., in terms of occupancy. "Surprisingly, Pittsburgh is one of those," said Mark Laport, president & CEO of Concord.
Concord has 11 hotels under construction, and Laport believes that this is an excellent time to develop. Interest rates are at rock-bottom levels, land prices have come down, and construction material prices have also moderated. In addition, architects are less busy than they were during the boom years, so design plans can be finished quickly. Also, contractors are now looking for work, and competing with each other on price, a good situation for a developer. It also means that Concord will have portfolio of new hotels in attractive markets, thus a competitive edge, when the lodging market begins to strengthen.
Of course, obtaining financing can be tough, and LaPort said that having a long-standing relationship with a community bank can go a long way to securing a loan. For its Pittsburgh hotel, Concord secured its loan from S&T Bank, which has financed seven of Concord's nine properties in Pittsburgh.
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Source - Commercial Property News
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