Thursday, May 14, 2009

PKF Hospitality Research Notes Good News but Bad Numbers for 2008

Fixed Costs A Problem In 2009

ATLANTA, GA, May 14, 2009 – The good news is that when faced with lower levels of business in 2008, U.S. hotel managers cut operating costs by 0.3 percent.

Unfortunately, total hotel revenues dropped 1.3 percent, resulting in a 3.8 percent decline in net operating income for the average U.S. hotel according to findings released today by PKF Hospitality Research (PKF-HR) in its 2009 edition of Trends® in the Hotel Industry.

(Hotel Crowne Plaza, St. Paul, MN, top left photo )

Given the depth and breadth of the continuing economic downturn, further expense cuts will not be enough to offset the anticipated declines in revenue in 2009.

“Forecasts of a double-digit decline in rooms revenue per available room (RevPAR) during 2009 are troubling enough.
"However, for the lenders, owners, and managers of U.S. hotels, the real concern is the impact on profitability,” says R. Mark Woodworth, (top right photo) president of PKF-HR.

“While the fall-off in lodging performance was not as great last year as it will be in 2009, an analysis of the 2008 data could prove instructive as a guide to how U.S. hotel managers will react this year as business levels continue to deteriorate.”

Each year PKF-HR collects financial statements from thousands of hotel owners and operators across the U.S. for its annual Trends® in the Hotel Industry report.

The 2009 Trends® report marks the 73rd edition of this publication and provides industry benchmarks for 2008 unit-level revenues, expenses, and profits. For the purpose of this analysis, net operating income (NOI) is defined as income before deductions for capital reserves, rent, interest, income taxes, depreciation, and amortization.

Revenues In 2008

Total revenue for the average property that participated in the 2009 Trends® survey declined 1.3 percent from 2007 to 2008. The main driver for the decline in revenues was the 1.8 percent drop off in average daily rate (ADR). Not only did rooms revenue decline 1.0 percent, but food and beverage revenue fell off 3.0 percent as well.

(Rendering of under-construction Fontainebleau Hotel Las Vegas, middle left)

“Not all property types in the Trends® survey reported declines in revenue in 2008,” Woodworth said.

“Total sales at both limited-service and convention hotels increased slightly during the year.” Resort hotels suffered the greatest decline in revenue (-4.6 percent) because of a 5.1 percent drop in occupancy, as well as declines in both food and beverage and other operated department revenues.

Expenses In 2008

“As we have seen during past industry recessions, U.S. hotel managers responded to falling revenues by cutting costs 0.3 percent,” Woodworth noted. “When reviewing the changes in departmental costs from 2007 to 2008, it becomes clear that the nature of the expenses within each department determined the direction and magnitude of change.”

(Hotel Le Meridien Cambridge, Cambridge, MA, middle right photo)

Expenses within departments for which management has the greatest control either declined in 2008, or grew at less than the pace of inflation.

Given the high degree of variable expenses found in the operated departments (rooms, food and beverage, other operated), the combined costs for these areas of a hotel decreased 1.5 percent from 2007 to 2008.

Overhead departments were not immune to cost containment in 2008. Excluding utility costs, undistributed departmental expenses (administrative and general, sales and marketing, property operations and maintenance) increased a mere 0.3 percent during the year.

(Hotel Ramada Plaza Kuwait, middle left photo, under Le Meridien Cambridge photo)

On the other hand, departmental expenses that are more fixed in nature grew greater than 3.0 percent. In 2008, growth in excess of inflation was observed in the utilities department (3.6 percent), property taxes (4.2 percent), and insurance (3.1 percent).

“Green practices, contract re-negotiation, and property tax appeals are available methods for management to reduce these costs. However, since they take longer to implement, the impact of these means may not be seen until 2009,” Woodworth commented.

Profits in 2008

With total revenue off 1.3 percent and expenses cut just 0.3 percent, the typical hotel in the Trends® survey suffered a 3.8 percent decline in net operating income. Except for convention hotels, all property types experienced a decrease in NOI.

Resort hotels reported the greatest decline in NOI (-11.3 percent) for 2008 followed by full-service properties (-5.1 percent) and suite hotels with food and beverage (-2.7 percent).
Limited-service properties and suite hotels without food and beverage also suffered declines in NOI, but to a lesser degree.

(Four Points by Sheraton Kuching, China, middle right photo)

The exception to the national trend was convention hotels. Properties in this category enjoyed a 3.2 percent growth in profits from 2007 to 2008, largely attributed to a relatively strong 3.0 percent gain in ADR. “It appears that contracted group rates negotiated prior to 2008 helped to offset the discounting that occurred during the fourth quarter of the year,” Woodworth noted.

(Hotel Illikai, Hawaii, bottom left photo under Four Points Sheraton Kuching)

Lessons From Past Contractions

“While hotel managers faced challenging market conditions in 2008, the magnitude of the declines in revenue do not match the severity of the fall off in performance forecast for 2009,” said Woodworth.

“To simulate the potential impact of declining revenue on profits during the current industry recession, it is helpful to take a look back at lodging industry performance during the 2001 industry recession.”

In PKF-HR’s 2001 Trends® survey, properties with RevPAR declines between 14 and 17 percent saw their profits fall off 24 to 31 percent from the prior year. As of May 2009, PKF-HR is forecasting a RevPAR decline in excess of 15 percent for the entire year.

“This downside benchmarking exercise provides some interesting insights as to the direction of U.S. hotel profits in 2009,” Woodworth said. “Given the inevitable decline in revenue for most properties, the focus once again will be on cost containment.
"Unfortunately, despite everyone’s best efforts, the magnitude of the declines in revenue will more than likely exceed the expense reductions, thus leading to further deterioration in profits in 2009.”
(Hotel Sheraton Safari Lake Buena Vista, FL, bottom left photo)

To purchase a copy of the 2009 Trends® in the Hotel Industry report and receive a complimentary copy of PKF-HR’s Downside Benchmarker tool, please visit www.pkfc.com/buyannualtrends.

PKF Hospitality Research (PKF-HR), headquartered in Atlanta, is the research affiliate of PKF Consulting, a consulting and real estate firm specializing in the hospitality industry.
PKF Consulting has offices in Boston, New York, Philadelphia, Washington DC, Atlanta, Miami, Indianapolis, Houston, Dallas, Bozeman, Sacramento, Seattle, Los Angeles, and San Francisco.


Contact: Chris Daly, Vice President, Daly Gray Public Relations, ph: 703-435-6293

GVA Advantis Negotiates New Leases and Renewals in Metro Orlando

ORLANDO, FL – (May 14, 2009) – GVA Advantis announced the completion of the following new leases and renewals totaling over 10,000 SF in Metro Orlando.

Lisa Bailey, (top right photo) Senior Director, Office/Industrial Services of GVA Advantis’ Orlando office, represented the landlord in the following transactions.

· In Motion Dance Project has leased 6,000 SF, or three units, at Orangewood Business Park, 2125 Orinoco Drive, Orlando. In Motion Dance Project is a state-of-the-art dance training facility offering professional instruction in numerous dance and performance styles for ages 2 ½ and up. For more information, please see http://www.inmotiondanceproject.com/

· Midwest Steel, Inc. which provides structural steel design build, design assist, detailing, fabrication, and field installation services to industrial, institutional and commercial customers in the United States and Canada, recently relocated their Orlando sales office to an 1,800 SF space in Lake Point Business Park, (middle right photo) 6250 Hazeltine National Drive in Lee Vista Center.

Midwest Steel’s Orlando office will focus on the Southeastern United States, which currently leads the country in construction projects. They relocated their offices from Southwest Orlando to be closer to Orlando International Airport.

· Law firm Henderson Sachs, PA, has renewed their lease of 1,670 SF in Atrium Tower (bottom left photo) located at 7680 Universal Boulevard.

Carol Tanner, Associate of Office Services, represented the landlord in the following transaction.

· 1024 Studios, LLC, a company specializing in designing computer software for tools such as Apple’s iPhone, has leased 1,178 SF of space in Lucien Green, located at 2250 Lucien Way
in Maitland Center. 1024 Studios also develops software for personal computers and sells products through retailers such as Best Buy.

Media Contact: Shelli Browning, Director of Marketing, 407.999.4775, sbrowning@gvaadvantis.com

HFF secures $18.25M refinancing for Orlando-area multifamily community

DALLAS, TX – The Dallas and Miami offices of HFF (Holliday Fenoglio Fowler, L.P.) announced today that they have secured an $18.25 million refinancing for Harbor at Lake Howell, (top right photo) a 408-unit multifamily community in Casselberry, Florida.

Working exclusively on behalf of LaSalle Investment Management, HFF managing directors John Rose and Paul Stasaitis (middle left photo) and director Elliott Throne (bottom right photo) placed the 7-year adjustable-rate loan with Freddie Mac (Federal Home Loan Mortgage Corporation).

LaSalle Investment Management is a worldwide real estate investment manager that is an independent subsidiary of Jones Lang LaSalle and has approximately $41.1 billion of assets under management.

Harbor at Lake Howell is situated on a 34-acre site at 1280 Vinings Lane in Casselberry, approximately seven miles north of Orlando.

The 90% leased property has one-, two- and three-bedroom units averaging 1,065 square feet. Community amenities include two swimming pools, a tennis court, a fitness center, a volleyball court and a business center as well as access to a boat ramp and beach on Lake Howell.
HFF (NYSE: HF) operates out of 17 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry.

HFF offers clients a fully integrated national capital markets platform including debt placement, investment sales, structured finance, private equity, loan sales and commercial loan servicing. www.hfflp.com.

Contacts:

John W. Rose, HFF Managing Director, (214) 265-0880, jrose@hfflp.com

G. Paul Sasaitis, HFF Managing Director, (305) 448-1333, pstasaitis@hfflp.com

Kristen M. Murphy, HFF Associate Director, Marketing(713) 852-3500, krmurphy@hfflp.com

Top Phoenix Retail Broker Launches Orion Investment Real Estate Solutions

Firm’s Founder Believes Entrepreneurial and Small Brokerage Firms Are Better Equipped to Provide Superior Service in Today’s Market

PHOENIX, AZ, MAY 14, 2009 – Ari Spiro, (top right photo) one of Phoenix’s premier retail investment brokers, has launched ORION Investment Real Estate Solutions, a brokerage firm specializing in the sale of commercial properties in the Southwest.

Sean Stutzman, (top left photo) a six year commercial real estate veteran, is also joining Spiro at ORION. ORION Investment Real Estate Solutions will be located at 7440 East Pinnacle Peak Road in Scottsdale.
With more than 15 years of real estate experience, Spiro previously served as vice president for Sperry Van Ness in Phoenix where he has been one of the company’s top advisors in the United States for several years.

Throughout his career, he has completed over a hundred transactions valued at more than $400 million. Stutzman previously served as a senior advisor with Sperry Van Ness in Phoenix specializing in the sale of retail and office properties.

“During this challenging economic and commercial real estate market, large brokerage firms are looking for ways to cut expenses and overhead costs, including trimming marketing and technology,” said Spiro.

“Launching ORION Investment Real Estate Solutions allows us to continue a superior level of service by integrating technology into every facet of the business and focused focusing on streamlining the acquisition and disposition process.

" I am grateful for my time with Sperry Van Ness and look forward to my continued relationship with management and its advisors.”

Spiro went on to say that, “as a small firm, we have the flexibility to adapt to this ever changing commercial real estate environment. We will continue incorporating new technologies and marketing tools to better serve our clients.”

ORION Investment Real Estate Solutions is a Scottsdale-based commercial real estate firm, focused on providing solutions to owners and investors of commercial properties throughout the Southwest.

Founded by Ari Spiro, a 15 year real estate veteran, the firm prides its self on delivering superior client relations though marketing and technology.

Contact: David Ebeling Ebeling Communications (949) 278-7851 david@ebelingcomm.com

Cassidy & Pinkard Colliers Team with Gensler to Design a New Office in NW Washington, DC

WASHINGTON, DC -- Cassidy & Pinkard Colliers, one of the country's leading full-service commercial real estate firms, with expertise in sales, financing, leasing, property management, and project management hired longtime partner, Gensler, to assist with real estate evaluation, space planning and design for the new 100-person office.

The result is Cassidy & Pinkard Colliers’ award-winning DC workplace, the recipient of the 2009 Pinnacle Award. The Pinnacle award is the most prestigious design honor bestowed by the International Interior Design Association.

Gensler reviewed various real estate options throughout the DC metro area before recommending that Cassidy & Pinkard Colliers lease 27,000 square feet of space in a newly renovated downtown building located at 2101 L Street, NW.

The unfinished shell allowed the design team to think strategically about creating a sophisticated office space that accurately reflected the client’s brand while providing functional areas for client meetings and entertainment, and a space that supports employee collaboration and workplace satisfaction.

The design team was also tasked with implementing construction and design practices in order to seek LEED certification. Rand Construction served as the general contractor.

Contact: Maureen Wheeler, Vice President of Corporate Marketing/Communications, Cassidy & Pinkard Colliers, 202.463.1138, Maureen.Wheeler@cassidypinkard.com

Arbor Closes Over $5M in New Fannie Mae Loans


Melbourne Park 3 Apartments in Greenville, NC Receives $3,442,500 Fannie Mae DUS® Loan

UNIONDALE, NY--- Arbor Commercial Funding, LLC (“Arbor”), a wholly-owned subsidiary of Arbor Commercial Mortgage, LLC, announced the recent funding of a $3,442,500 loan under the Fannie Mae DUS® Loan product line for the 72-unit complex known as Melbourne Park 3 Apartments in Greenville, NC. (top left photo)

The 10-year loan amortizes on a 30-year schedule and carries a note rate of 6.10 percent.

The loan was originated by John Edwards, (top right photo) Vice President, in Arbor’s full-service Boston, MA lending office.
“The financing of Melbourne Park 3 highlights Arbor’s ability to structure a loan on a phased property with a strong repeat client and a solid property condition,” said Edwards.
Courtyard Apartments in Gretna, LA Obtains $1.8M Loan

UNIONDALE, NY--- Arbor Commercial Funding, LLC (“Arbor”), a wholly-owned subsidiary of Arbor Commercial Mortgage, LLC, announced the recent funding of a $1,800,000 loan under the Fannie Mae DUS® Loan product line to refinance the 84-unit complex known as Courtyard Apartments in Gretna, LA.

The 10-year loan amortizes on a 30-year schedule and carries a note rate of 5.65 percent.

The loan was originated by Jay Porterfield, (bottom right photo) Vice President, in Arbor’s full-service Plano, TX lending office.
“Arbor provided a loan to refinance the existing, maturing loan on this property in New Orleans,” said Porterfield. “We were pleased to provide competitive, fixed-rate financing for this particular borrower, a wonderful organization that provides affordable housing options.”

Contact: Ingrid Principe, P: 516.506.4298, F: 516.542.2555, http://www.arbor.com/

Construct Two Group only African American firm ranked among Central Florida’s largest construction companies

ORLANDO, FL— Construct Two Group is the only African American- owned construction company listed among Central Florida’s 25 largest construction companies in a recent poll conducted by Orlando Business Journal.

The annual survey ranked construction companies based on 2008 operating revenues for Central Florida projects. Published in the journal’s April 3 – 9, 2009 issue, Construct Two Group came in 14th with 2008 revenues of $27.2 million.

“This achievement is a credit to our team and a reflection of our company motto to demonstrate daily to clients that we provide them with so much more,” said Construct Two President/CEO Keith Williams.

Construct Two Group provides construction management, design-build and program management services to public and private sector clients. Having completed more than $500 million in projects since its founding in 1990, Construct Two Group is the largest African-American-owned construction management company in Florida.

The Company employs a professional and support staff of 31 from offices in Orlando, Tampa and Tallahassee, Fla. Please visit http://www.constructtwo.com/ for additional information.

Contact: Elaine Ingra, PR WORKS!, PH: 407 384-1344, elainei@pr-works.com, http://www.pr-works.com/

CORE Construction Florida Starts Marco Museum with Special Vault to Hold the Key Marco Cat

SARASOTA, FL --- More than a century ago, explorer Frank Hamilton unearthed an amazing cache of artifacts on Marco Island remaining from a Calusa Indian village inhabited from 500 A.D. to 900 A.D.

One of the artifacts---known as the Key Marco Cat (top right photo) ---is an amazing wood carving, somewhat reminiscent of Egyptian cat carvings, preserved by accident in an acid-free bog on the island.

CORE Construction Florida was recently awarded a contract to build a new museum valued at more than $2.8 million for the Marco Island Historical Society with a special vault to preserve the treasured Key Marco Cat.

The project includes an 11,000 square foot building for the museum and administrative offices and a separate 6,242 square foot building for a “Living History Hall,” Wiseman said.

John Wiseman, (middle left photo) president of CORE Construction Florida, said the new museum will open in January, time to celebrate the 100th anniversary of Marco Island.

The Key Marco Cat will reside in the museum on loan from the Smithsonian Institution.

CORE Construction has been in business since 1937 and ranks as one of the nation’s largest commercial contracting companies. CORE Construction is also active in Illinois, Nevada, Arizona and Texas. CORE Construction Services Southeast, Inc. has offices in Sarasota, Orlando and Naples.

For more information, please contact:

John P. Wiseman, President, CORE Construction, 6320 Tower Lane, Sarasota, FL 34240
Larry Vershel or Beth Payan, Larry Vershel Communications, 407-644-4142

Foster Conant to design landscape for Wesley Chapel Medical Center

ORLANDO, FL— Foster Conant & Associates was selected by HuntonBrady Architects to provide landscape architecture for the new Wesley Chapel Medical Center underway in Wesley Chapel, Fla.


Foster Conant is providing design, construction documents and construction observation for landscape, irrigation, hardscape, landscape lighting and site furnishings for the 51-acre site.

This phase of the medical complex is composed of a freestanding, three-story, 250,000-square-foot acute care hospital with 80 beds, diagnostic and treatment departments, and support services, a three-story, 100,650-square-foot medical office building, infrastructure and access roadways.

Plans call for the design of two healing garden spaces on the grounds of the complex. The amount of Foster Conant’s contract is undisclosed.

“We are currently in the concept design phase of this project,” said Foster Conant Principal Keith Oropeza, ASLA. “The construction observation portion of our contract will be scheduled into the overall construction of the access roadway and buildings.”

Pasco-Pinellas Hillsborough Community Health System Inc., a joint venture of Adventist Health System and University Community Health, is the owner and developer of Wesley Chapel Medical Center.



The Florida-based architectural and engineering design team includes HuntonBrady Architects, Orlando; BBM Structural Engineers, Longwood; Smith Seckman Reid Inc., Sarasota, mechanical, electrical, and plumbing engineering; and King Engineering Associates, Tampa, civil engineering.


For an extensive presentation of projects, please visit http://www.fosterconant.com/.

Contact: Elaine Ingra, PR WORKS!, PH: 407 384-1344, elainei@pr-works.com, www.pr-works.com

Marshall Hotels & Resorts, Inc. Promotes Three on Senior Management Team

New Responsibilities Reflect Company’s Growth Strategy

SALISBURY, MD– Officials of Marshall Hotels & Resorts, Inc., a leading, Maryland-based hotel management and services company, announced the promotions of Ben Seidel (top right photo) to chief operating officer, Michael Getzey (middle right photo) to president of the company’s newly formed construction and renovation division, and David Harvill (top left photo) to executive vice president of accounting.

The three promotions reflect the company’s recent expansion and put the infrastructure in place to support the company’s future growth plans.

“Ben, Mike and Dave have a combined total of more than 75 years of hospitality industry experience and bring invaluable property, regional and corporate level know-how to our executive team,” said Michael Marshall, (bottom left photo) president and CEO of Marshall Hotels & Resorts, Inc.
“We have fortified our senior team and structured their responsibilities to optimize returns for our hotel owners. All three have proven track records of motivating those around them and successful operations management in all phases of the economic cycle.”

In his new role, Seidel will be responsible for overseeing the operations of the company’s more than 50 managed properties. He has more than 25 years of experience in full- and focused-service hotel, as well as convention center, management.

He has held operating positions with such well-regarded branded hotels as Marriott, Sheraton, Hilton, and Radisson. Prior to joining Marshall Hotels & Resorts, Inc. in 2006, Seidel oversaw a $300-million hospitality portfolio that generated more than $80 million in annual revenue.
He holds an undergraduate degree from West Chester University in Pennsylvania and received his certified hotel administrator (CHA) and certified hotel sales professional (CHSP) certifications from the American Hotel & Lodging Association’s Educational Institute.

Getzey is responsible for the company’s development and renovation division. Since joining Marshall Hotels & Resorts, Inc. in 1981, he has been integrally involved in acquisitions, hotel development and project administration. Getzey has consulted on numerous multi-million dollar hotel construction developments and overseen more than $25 million in hotel renovations.

He graduated from Delaware's Brandywine College and attended the Culinary Institute of America.

Harvill will head the company’s multi-faceted accounting and financing operations. With more than 20 years of experience in the hospitality industry, he has been a property controller, area controller, regional controller and assistant corporate controller for such hotel companies as Hilton, Starwood and Interstate Hotels.

While with Marshall Hotels & Resorts, Inc., he has been responsible for the company’s accounting discipline at the property and corporate levels, training, audit, information technology and consulting. Harvill has a bachelor’s degree in hotel management and a minor in accounting from Tompkins College.

“We increased our hotel portfolio with 15 contracts and oversaw more than $5 million in renovations last year, while our other properties generated a 5.1 percent increase in average RevPAR premium over their respective competitive sets,” Marshall noted.

“With these promotions, we now have the management depth and the appropriate infrastructure to continue to grow on a planned basis.”

Contacts:

Rick Day, Senior Vice President – Sales and Marketing, Marshall Hotels & Resorts, (410)749-8464, rday@marshallhotels.com

Jerry Daly, media, Daly Gray Public Relations, (703) 435-6293, jerry@dalygray.com