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Article Listing | Search Articles | More Articles in Hotel Industry | More Articles by By John Walsh

Opportunity knocks for developers in the hotel industry

by By John Walsh - 04/10/2009
 
"The tables might be turning—in favor of the US hotel industry.

A few years ago, when development was booming throughout the country, condo developers were outbidding hotel developers for real-estate projects. Times are changing.
"
 
The tables might be turning—in favor of the US hotel industry.

A few years ago, when development was booming throughout the country, condo developers were outbidding hotel developers for real-estate projects. Times are changing.

“There’s not a whole lot of activity of any kind going on right now,” said Deno Yiankes, president and CEO of investments and development for White Lodging Services Corp. in Merrillville, Indiana. “When things were going and blowing, the residential players were outbidding us for the highest and best-use development projects. But that’s come to a screeching halt.”

“In the overbuilt condo market in Miami Beach, lenders are taking properties back,” said David Teitelbaum, a real-estate developer and resort owner. “Las Vegas is hurting, too.”

White Lodging and other ownership, development and management companies are keeping an eye on the condo projects that have failed and are ready to take advantage of the land and build hotels.

“There’s nothing coming out of the ground,” Yiankes said. “There are just as many conversion opportunities with land as there are with existing buildings. Most of what we see is an unimproved piece of land because debt or equity financing fell through. In some cases, a hotel may make sense.”

These opportunities, generally, are in urban and leisure markets, such as Chicago and Miami, where there is an oversupply of residential units. Vacancy rates could be 20 percent to 30 percent, Yiankes said.

“Most hotel investors are in an infancy stage,” he said. “They’ve got feelers out. They’re talking to developers. We’re doing a lot of sniffing around.”

Bucking the national trend

Teitelbaum is no stranger to the adaptive reuse of real estate. He’s been doing it since 1975 when he was converting an oversupply of office space into apartments, which were undersupplied, in New York City. He became so successful at it, he eventually taught appraisers how to reevaluate adaptive-use properties.

In Florida, Teitelbaum acquired the Tortuga Inn Beach Resort in 2003 and the Tradewinds Resort in 2004. Both of the Bradenton Beach Gulf-to-Bay resorts were repositioned, renovated and refurbished. Twenty-three, two-bed, two-bath apartments were constructed, decorated and furnished from 2004 to 2006. Ninety luxury apartments in the two resorts were converted into hotel-condominium ownership.

“We’re going against the national trend,” he said. “We’re buying distressed properties and making them adjuncts to my three resorts (the Tortuga Inn, Tradewinds Resort and the SeaSide Inn Beach Resort) on Anna Maria Island. I’m looking to expand my franchise.”

Teitelbaum’s resorts, which generate a lot of wedding business, have a combined 450-room capacity.

“Our island was a secret,” he said. “Then we were discovered by U.S. Today in December of 2008.”

Amid declining rates, occupancies and revenue nationwide, Teitelbaum’s resorts are performing well, he said.

“We’re not gouging or giving things away,” he said. “We’re offering value and family accommodations.”

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More Details: http://www.hotelnewsnow.com/articles.aspx?ArticleId=983&PageType=News&ArticleType=35
 
 
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