Posted August 21, 2011

The board of directors at Marcus & Millichap has promoted Rahul R. Bijlani to the position of vice president investments.

Most recently, Bijlani held the position of associate vice president investments.

Bijlani began his career with Marcus & Millichap in June 2005, specializing in the sale of hospitality properties.

This designation exemplifies superior performance in the accomplishments an agent has achieved in his or her sales career at Marcus & Millichap and in the investment real estate brokerage profession, according to Brent Smith regional manager of the firm’s Houston office.

Commercial Real Estate – Heavy Hitters

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Date: Friday, May 13, 2011, 5:00am CDT

Hospitality

Selected by Marcus & Millichap Real Estate Investment Services

Michael (Kaiyi) Yu, vice president, investments

Hometown: Tianjin, China

Downturn strategy: Continue to close deals.

Busiest building: Limited service hotel/motels. That is my area of specialization and focus.

Second career choice: Building a business from the ground up

2011 real estate outlook: Sales activities will be up. Pricing will hold steady.

Your typical Saturday: Usually spent with my family.

Rahul Bijlani, associate vice president, investments

Favorite quote: “I don’t think of work as work and play as play. It’s all living.” – Richard Branson

Hometown: Pune, India

Downturn strategy: We had lower transaction volume during

the downturn, but did not really have to change any aspects of our business to make ends meet.

What the recession changed: We have improved our attention to detail as well as our emphasis on having a comprehensive understanding of our clients’ investment needs. In this environment, it is critical to know as much about a client’s portfolio as possible, including details of how the cash flows and/or how the sale of one asset could impact others. In the previous market, seller motivation was often price-based — on the other hand, in 2011 sales are often motivated by far more specific criteria. If our clients have visibility with us, it increases our ability to add more value to their business beyond simply securing qualified buyers.

Second career choice: Technology. My background is actually in computer science and data mining, and I still code from time to time.

2011 real estate outlook: The price gap between buyers and sellers for hospitality products is shrinking — as sellers begin to reconcile with dropping valuations, and buyers begin to realize that they cannot get both high cash flow and a low price/room. Financing is also making a steady comeback, with lenders realizing that both deal quality and buyer quality are much higher than in previous years. Lastly, lenders with distressed assets on their books are beginning to realize that they need to offload these properties before sustaining further losses and are getting more realistic about valuations. Hence, my projection for hospitality real estate is an increase in velocity all through 2011 and continuing into 2012 — at prices that are the lowest we’ve seen in the last few years.

Can’t work without: My iPhone, of course. With great apps like DropBox, SalesForce and Logmein, I can access any information I need at any time, no matter where I am.

Premium content from Houston Business Journal

Date: Friday, May 13, 2011, 5:00am CDT

Rooms : 54 Year Built : 2004  - REO/ Lender owned - Marketed property for 7 days - Received 36 written offers - Closed transaction with “all cash” buyer,     2 days after executed contract     Marcus & Millichap Real Estate Investment Services, the nation’s largest real estate investment services firm, has announced the sale of La Quinta Inn & Suites NASA, a 54 room hotel located in Seabrook, TX, according to Brent Smith, Regional Manager of the firm’s Houston office.        Rahul Bijlani, Michael Yu and Tyler Bean, investment specialists in Marcus & Millichap’s Houston office, had the exclusive listing to market the property on behalf of the seller, a bank/financial institution. The buyer, a limited liability company, was also secured and represented by Yu and Bijlani, investment specialists in Marcus & Millichap’s Houston office.      La Quinta Inn & Suites NASA is located at 3636 Nasa Road 1. The property was built in 2004 and sits on 1.3711 acres.

Yu/Bijlani Hospitality – “We Believe Transactions Should be Transparent and Predictable” Securing Buyers – More pro-active calls than any hotel broker in Texas Securing Financing – Lenders lined up for every listing Pro-active Transaction Management – Specialists to support every step of the transaction Pricing – Exclusive listings deliverable at market prices    Yu/Bijlani Hospitalty Team Business Development Specialists: Tyler Bean and Eric Guerrero Transaction Analyst: Jessica Forsdick Financial Analyst: Kenny Ho

Phone: (713) 452-4246     Fax: (832) 327-5220    Email: info@ybhotels.com

HOSPITALITY’S BRISK PACE
Projected rise of full-time positions to benefit sector.
Michael Yu and Rahul Bijlani

Yu

The modest economic recovery helped to raise occupancy levels in the hospitality sector last year and a transition to a more normal and sustainable expansion cycle will occur through year’s end 2011 as job creation and economic activity accelerates nationwide. Employers will add nearly twice as many positions this year as in 2010, spurring an increase in business travel and spending on vacations. The projected rise in the creation of full-time positions and less reliance on temporary workers will greatly benefit the hospitality sector across the United States and in Texas.

The Texas hotel market is quickly emerging from the recession and improving at a brisk pace. Occupancies increased 4.2 percent to 57.8 percent from the first quarter of 2010 to the first quarter of 2011. Occupancy numbers, it should be noted, are somewhat skewed due to high demand in Dallas, the location of the last Super Bowl in February. ADR also improved 4.2 percent to $87.81 during the same period. RevPAR growth throughout the state increased a substantial 12.4 percent to $50.76 by the end of the first quarter of 2011.

Bijlani

In Central Texas, the economy continues to strengthen. Austin job growth will improve as the pace of hiring accelerates. During 2011, local employers will add 21,000 positions, a 2.7 percent increase and up from the creation of 14,400 jobs last year. Similarly, San Antonio metro payrolls will expand 2.4 percent this year as employers add 20,000 positions. The professional and business services and education and health services sectors will increase by 3 percent and 4 percent, respectively

Tourism activity in Central Texas will receive a lift next year with the completion of a $250 million Formula One race track in southeast Austin near the Austin Bergstrom International Airport. The 970-acre, 3.4-mile racetrack is expected to come online in 2012. As a result of the new Grand Prix-style racetrack, hotel room demand is expected to pick up from both out-of-state and foreign travelers.

Rockwall Commons, a 216,651-square-foot mixed-use property in Rockwall, Texas, has changed hands. It consists of 202 multifamily units as well as retail and office space. See page 9.

The largest recent transaction in Central Texas closed last August when a joint venture of Lodging Capital Partners and Syndicated Equities Group secured a $56 million first mortgage loan from Mesa West Capital to refinance their existing mortgage on the 291-key Four Seasons Austin. The JV also received a mezzanine loan from Blackstone Real Estate Debt Strategies. Demand for the Four Seasons, which is in the Austin CBD, comes from the state capitol and University of Texas.

There is a very limited amount of distress in the Central Texas lodging sector. Investment activity in both Austin and San Antonio has been fueled by private investors, who plan to remain in the market for the long-term. Due to their belief that an economic recovery has truly taken place in Central Texas, local investors are leaving the sidelines and are poised to acquire hospitality assets now and in 2012.

— Michael (Kaiyi) Yu is a vice president, investments and Rahul Bijlani is an associate vice president, investments at Marcus & Millichap Real Estate Investment Services. Both hospitality investment specialists are based in the Houston office.

REDNEWS Jan 20, 2011

GRANBURY, TX - Marcus & Millichap Real Estate Investment Services has announced the sale of a 53-room limited service hotel located in Granbury, TX, according to Brent Smith, Regional Manager of Marcus and Millichap’s Houston office.

Michael Yu, Rahul Bijlani and Tyler Bean, investment specialists in Marcus and Millichap’s Houston office, had the exclusive listing to market the property on behalf of the seller, an out of state lender. Within a 4 week timeline, the group generated 13 written offers from qualified buyers and the ultimate buyer, a local Texas investor, was secured and represented by Michael Yu, Rahul Bijlani and Eric Guerrero.

US Banker  |  December 2010

 By Rob Garver

Of the nearly 8,000 banks in the United States, less than half participate in the Small Business Administration’s lending programs, and the vast majority of those participate in only the most limited sense.

In 2009, for instance, the SBA reported that 2,600 banks participated in its 7(a) program for general small business loans. But the average number of loans made by those banks was only 17, and that number was seriously skewed. Hundreds of participants made only one SBA loan, and the vast majority made fewer than 10.

But recent changes to the law-which were overshadowed by the Obama administration’s announcement of a $30 billion small-business loan fund through community banks-may make SBA lending more attractive to bankers, industry observers say. The modifications may mean current SBA lenders may find incentive to participate at higher levels, and banks that previously viewed instituting an SBA lending program as more trouble than it was worth may want to reconsider.

“As the lending environment is becoming more competitive, banks are going to look at adding SBA lending to their portfolio of business,” says Paul Merski, senior vice president and chief economist at the Independent Community Bankers of America. “The enhancements to the SBA program are going to make it more attractive to get banks involved in the program.”

The shift in SBA policy is a result of the 2010 Small Business Jobs Act, passed in September, which was meant to spur hiring by allowing small companies the funding they need to expand operations.

The SBA last month announced that as a result of the act it had increased the size of the loans available under several of its programs from $2 million to $5 million. The increase includes loans made under its 7(a) program for general small business loans and its 504 program, which covers fixed-asset loans.

The agency also reduced the fees it charges lenders and increased the level of guarantee it offers, creating further incentives to spur participation. It has also budgeted for an outreach program aimed at bringing more community banks into the SBA system.

SBA Administrator Karen Mills says the larger loan sizes are there to help small-business owners grow and create jobs. Whether through a start-up micro loan or a real estate loan to take advantage of low interest rates and commercial property prices, “SBA loans can now be an even greater resource to help entrepreneurs and small business owners get the capital they need,” Mills says.

The changes-particularly the elimination of the guarantee fee-have had immediate results, say some bankers.

“It has helped us out a lot,” says Robert A. Catanzaro, president of Independence Bank, in East Greenwich R.I. Catanzaro said that Independence, a privately held bank with $70 million of assets, has already seen small business loans in its pipeline increase as a result of the guarantee fee being eliminated.

He says that the guarantee fee, which could run to as much as $26,000 for a $1 million loan, was a real impediment to small borrowers, and cut them off from what was sometimes their only source of credit.

“For small businesses there are generally not a lot of other options they have for financing at this time,” Catanzaro says. “Small businesses in general rely on bank loans and the SBA program is one of the best and sometimes the only option for the small business.”

The changes at the SBA come as many banks are beginning to see small business lending as an area primed for growth.

In October, Bank of America announced plans to hire 1,000 additional small-business bankers by 2012. Once among the nation’s top small business lenders, BofA drastically cut loans to small firms during the financial crisis, barely cracking the top 100 in 7(a) loan volume last year. In addition to relaxing the limits on loan size and reducing fees, the government has also taken steps to make additional capital available to lenders.

At the same time the SBA announced its changes, the Treasury Department announced that it had allocated $1.5 billion in funding to the State Small Business Credit Initiative, under which states partner with local lenders to extend credit to small businesses. The program requires the states to show that every dollar in federal funding received resulted in $10 in private lending.

This fall, the Obama administration announced that a pool of $30 billion in low-cost capital would be made available to banks that agree to use it to increase their small business lending. Banks with $10 billion or less of assets can apply for capital from the fund, paying an initial 5 percent dividend that could be reduced to as little as 1 percent if the banks increases its small business lending above certain thresholds.

“If it counts as Tier 1 capital, we would definitely make an application to that program,” says Catanzaro, of Independence Bank.

Tapping the $30 billion capital pool may be especially attractive to banks that accepted money through the Treasury Department’s Troubled Asset Relief Program. Certain TARP recipients are eligible to refinance their TARP funds-on which they otherwise could pay as much as 9 percent interest by 2013.

Charles Wendel, president of Financial Institutions Consulting, says that the fund may also be attractive to community banks because regulators are pressing them to increase their capital levels at the same time that it has become increasingly difficult for them to tap additional capital through markets or existing shareholders.

To be sure, the government’s efforts have met with some criticism. Many bankers, feeling burned by the perceived demonization of institutions that accepted TARP money, are balking at the prospect of taking more funds from a government program.

And there are additional questions as to the ability of such a program to generate demand. The elimination of the guarantee fee and the increase in the loan limits are expected to have a positive effect on the number of borrowers seeking loans, but it is unclear at this point whether that will be enough to overcome other factors keeping demand down.

“Commercial borrowers, despite healthy balance sheets, seem to have adjusted to working leaner and remain reluctant to expand or borrow in the face of such vast economic and political uncertainty,” wrote R. Scott Seifers, managing director with Sandler O’Neill & Partners, in a research note. “And even though many banks note their healthy commercial pipelines, only a fraction of that seems to be translating into new loans.”

But Merski of the ICBA says he is confident that as more banks get interested in lending to small businesses, competition will lead to better terms and greater demand, which will in turn drive more banks to offer SBA loans.

“Going forward, the changes in the program that have made them more robust and more attractive are going to have more and more bankers get into the SBA lending programs,” he says.

By Nadja Brandt and Dakin Campbell – Nov 28, 2010 11:01 PM CT

JPMorgan Chase & Co. and Wells Fargo & Co. are seeking to increase financing for hotels as lenders recover more money from loans backed by lodging than from debt secured by other types of commercial real estate.

Lenders’ losses on non-performing hotel loans were about 53 percent this year through September, compared with 63 percent for retail property loans, 62 percent for industrial, 61 percent for multifamily and 57 percent for office, according to data from Trepp LLC, a New York-based mortgage-information provider. The figures exclude loans with losses of 2 percent or less.

A recovery in the lodging industry helped delinquencies on U.S. commercial mortgage-backed securities drop for the first time in almost three years last month, Fitch Ratings said in a Nov. 5 note. The revival is lifting hotel property values and enticing lenders to rework existing loans and seek out new ones.

“Right now is a particularly attractive time to be lending to the hotel sector,” Christopher Jordan, head of hospitality banking at San Francisco-based Wells Fargo, said in a telephone interview. “We prefer lending at the trough to lending at the top. Now you are at the front end of the upswing.”

The Hilton Times Square in New York City is among properties benefiting from the renewed interest in hotel lending, completing a $92.5 million, 10-year loan this month. The senior loan, which carries a fixed interest rate of less than 5 percent, was secured through Bank of America Merrill Lynch and replaced financing set to mature in December, real estate services provider Jones Lang LaSalle Inc. said Nov. 11.

‘Actively Seeking’ Loans

“It’s a true indication that lenders are actively seeking to place debt on high-quality, well-located hotels,” Jeffrey Davis, a New York-based executive vice president at Jones Lang LaSalle Hotels, based in London, said in a statement.

Hotel occupancies in the top 25 U.S. markets climbed to 65 percent this year through September from 61 percent in the same period in 2009, said Smith Travel Research Inc. of Hendersonville, Tennessee. Revenue per available room rose 6.3 percent to $75.79.

“We are definitely making loans on hotels,” said Jon Strain, head of capital markets for JPMorgan’s commercial real estate group. Revenue and occupancy “trends have been very strong across the U.S.,” he said.

The New York-based bank doesn’t break out its hotel lending. It had about $8.4 billion in loans tied to lodging, real estate investment trusts, homebuilders and other properties as of Sept. 30, according to the bank’s third-quarter filing with the Securities and Exchange Commission. That compares with $11.2 billion at the end of last year.

Wells Loans Rise

Wells Fargo had about $6.5 billion of mortgages or construction loans tied to hotels and motels outstanding at the end of September, according to its quarterly filing. That’s up from $6.4 billion a year earlier. The lender’s entire commercial real estate portfolio was $126.7 billion, or about 17 percent of total loans, as of Sept. 30.

CMBS delinquencies dropped to 7.78 percent at the end of October, down 88 basis points from the previous month, according to Fitch. Hotel delinquencies fell to about 14 percent from 21 percent in September, the largest percentage-point decline ever recorded by Fitch for any property type.

The resolution of seven loans greater than $100 million contributed to the decline, Fitch said. That included a $4.1 billion Extended Stay Inc. loan backed by a portfolio of 682 hotel properties. Extended Stay last year filed the largest bankruptcy by a U.S. hotel owner.

‘Very Attractive Investment’

“Hotels represent a very attractive investment opportunity because they’ve seen such a sharp decline,” Jonathan Gray, senior managing director and co-head of real estate at Blackstone Group LP, said during a conference in New York on Nov. 18. “We’ve been deploying a lot of capital in this area.”

Gray has invested $4 billion in distressed deals for Blackstone in the past year, including stakes in Extended Stay, mall owner General Growth Properties Inc. and Sunwest Management Inc., an assisted-living provider.

Rising prices for hotels and money raised in share sales by real estate investment trusts have boosted lender confidence in the lodging industry, said Jordan of Wells Fargo.

“REITs and other hotel buyers have been paying tomorrow’s prices today, particularly in some cities, like New York and Washington, D.C., so they don’t miss out on the opportunity to own those assets,” he said. “These transactions have been a window into the value of hotel properties and have injected confidence into the system.”

Eleven Hotels Trade

This year through October, 11 hotels have traded for more than $100 million each, up from three a year earlier, according to Arthur Adler, managing director and chief executive officer for the Americas at Jones Lang LaSalle Hotels.

Low interest rates also have helped keep loan losses lower on lodging because hotels, more so than other commercial properties, tend to be financed with floating-rate debt, according to JPMorgan’s Strain.

The highest loan loss on an individual property in the lodging sector this year through September was 86 percent. That compares to an individual loan loss of 112 percent in the multifamily sector, 110 percent in retail and 99 percent in industrial, according to Trepp data.

Losses can total more than 100 percent because such costs as legal expenses, appraisals, tenant improvements and court- filing fees often aren’t repaid.

Floating Rates

“Part of the reason for lower loan losses is that the majority of hotel financing was done with floating rates,” said Strain of JPMorgan. “With the Fed injecting liquidity into the market, keeping interest rates low, a lot of the hotels are performing despite tremendous stress on them. Their interest debt service is low relative to the office and industrial sector.”

Losses on financing backed by midscale hotels or properties in suburban and rural markets are greater than those secured by hotels in metropolitan areas, said Paul Mancuso, vice president at Trepp.

“Loans backed by hotels in prime geographic locations are being modified more easily,” he said. “Some loans backed by midscale properties or hotels in suburban locations and tertiary and secondary markets, those loans are the ones that still have trouble.”

Morgans Hotel Group Co. in October won extensions for loans backed by its Hudson New York hotel in Manhattan and the Mondrian Los Angeles after paying down a portion of the money owed on the two properties. The company was able to negotiate a lower interest rate.

Boost Rents Quickly

Hotels have another advantage that other types of commercial real estate lack, said Morgans President Marc Gordon. They can boost rental rates quickly to take advantage of economic growth, while tenants at offices and retail properties tend to sign multiyear leases.

“Almost the entire tenant base of a hotel checks out every morning, and the operator effectively re-leases the building the next day,” he said. “With other commercial real estate, the operator usually has multiyear-term leases. As a lender, you don’t really know where rent rates will reset. At a hotel, a lender can see exactly how the hotel does operationally.”

Such personal touches have served Holmes, 53, well throughout his career. He’s often been the key problem-solver in the transformation and birth of the businesses that make up Wyndham Worldwide, one of the largest lodging companies in the world. 

Wyndham Worldwide franchises 7,150 hotels under 12 brands, including the namesake chain, Travelodge, Howard Johnson, Ramada, Super 8 and Days Inn. It also operates time-share properties and a large time-share exchange company, Wyndham Exchange & Rentals (formerly Group RCI).As a corporate entity, Wyndham is only 4 years old, having been spun off from Cendant in 2006. But its businesses have a colorful history dating to the early 1990s, with complex acquisitions, mergers, spinoffs and painful corporate divorces. 

Through it, Holmes, an accountant by training, has been a constant in Wyndham’s offices, navigating the spinoff from its parent and charting a new course as a publicly traded company recovering from one of the industry’s deepest downturns. ”They’re flying under the radar,” says Joe McInerney, CEO of the American Hotel & Lodging Association. “You hardly see Steve in front. He’s a low-key guy. It’s a very low-key company. He’s not a guy to beat his chest about how great (he is). But he’s the backbone of the company.”

 Welcoming guests

 The company started when Henry Silverman, a noted private-equity investor, created Hospitality Franchise Systems (HFS) in the early 1990s to buy hotel franchises.

 Silverman issued shares of HFS in 1992, and the stock performed well throughout the decade as it grew to become one of the largest hotel franchisors. HFS was subsequently renamed Cendant, which later split its business units into four major companies. Holmes, who had been operating Cendant’s largest unit — hotels and time shares — assumed control of Wyndham Worldwide in 2006.

 Holmes owes much of his career to Silverman, having worked with him since the early 1980s when the two met at private-equity firm Reliance.

 In 1982, Holmes, then an internal auditor at Reliance, was fiddling with a Tandy computer in the evenings, learning a spreadsheet program. Silverman would often walk by and observe, intrigued by the young man’s efforts.

“I feel this presence standing outside,” Holmes recalls. “After a month of stopping by, he came in and said, ‘Show me what you’re doing.’ I didn’t know who he was. He said, ‘Can you take the spreadsheet and run the numbers out?’ ”

Silverman was pleased with the result and hired Holmes on his staff.

“(I) get a lot of questions: ‘How do you get a break in life to become a CEO?’ ” Holmes says. “Mine started in 1982. It all started because I had the intellectual curiosity to figure out how this thing works. And he had the intellectual curiosity to say, ‘Can I take this and use it somewhere else?’ ”

Silverman took Holmes with him to the Blackstone Group, a private-equity company, and HFS. “I was a kid,” Holmes says. “(Silverman) put me into positions that no one else my age was getting to do — negotiating deals, integration of companies, major acquisitions. And I went and did it.”

Holmes also impressed Silverman with a “self-effacing” personality that would work well in buying and integrating new companies, Silverman says.

Employees and other business associates echo Silverman’s impressions of Holmes’ modest, easy-going personality. He’s known for remembering employees’ names. He frequently uses the company cafeteria and doesn’t have his own restroom. “I don’t know any CEO at that level who doesn’t have his own restroom,” Ballotti says.

Bump in the road

Holmes’ calm demeanor came in handy when Silverman made the decision in 1997 to buy CUC International, a direct-marketing company, for $14 billion. The newly combined company changed its name to Cendant, and CUC’s founder Walter Forbes took over as CEO.

A few months later, the deal closed, and Cendant discovered a massive accounting fraud at CUC, resulting in one of the largest financial scandals of the 1990s. When Silverman announced the discovery, Cendant’s shares lost $14 billion in market value in a single day in 1998. Forbes and then-vice chairman Kirk Shelton were subsequently convicted of fraud and each ordered to pay $3.28 billion in restitution, the largest payout in U.S. corporate history at the time.

As bad headlines piled up, Silverman relied heavily on Holmes, who was a board member and in charge of the hotel business at the time. Holmes was deployed to assure customers and employees that the operating businesses were running fine despite the fraud at CUC.

A key lesson Holmes learned from Silverman — a hands-off management style — still resonates at Wyndham. Holmes empowers his unit presidents by giving them autonomy to set their strategies and execute plans, Ballotti says.

Holmes says he stays close to his business but doesn’t like to meddle. “My goal is to give them the tools to succeed. But I hold them accountable to executing our business plans.”

Stop being your own worst enemy in regards to your bottom line and get the confidence to boost those rates now.

Monday, November 15, 2010

Raise rates now. It’s the mantra being spouted by leading industry prognosticators here at the AHLA’s Fall Conference, and for those looking to compete as we are headed into this up cycle it’s critical for hoteliers to get the confidence they need to boost the asking price for a hotel room.
 
They’re saying what we here at Hotel Interactive have been saying for months: Adding a few bucks to your room rate and continuing to raise it slowly and incrementally is not just a good idea, it’s imperative.
 
Douglas K. Shifflet, chairman & CEO, D.K. Shifflet & Associates, says there is a predominant myth that RevPAR is low because the industry simply can’t raise rates. That is simply not true, he believes; he also says the reality is that consumers see the value they are getting for the price they are paying for a typical hotel room is “in fact very good.”
 
“Raise rates incrementally now. We are at the highest value to cost for the consumer and they believe they are getting a deal right now and indeed they are,” says Shifflet. “Bring rates up in small increments because you are behind the curve already.”
 
Shifflet says when bad times come everyone tries to hold rates, but when things turn around hoteliers fail to raise rates as much as they could without market resistance.
 
“Consumers realize the cost of business is going to up,” says Mark Woodworth, president, PKF Hospitality Research. “And once a consumer sees they can’t get what they want when and where they want it, they conclude they have to pay more.”
 
“It’s time to push rates. Think about it: In general there is not a lot you can do to increase demand coming into your market, but you can impact what they pay,” says Warren Marr, CRE, director, hospitality & leisure consulting services, PricewaterhouseCoopers LLP.
 
Marr cites strong occupancy and ADR gains coming in 2011, even more so than in their previous outlook. He says demand is so strong, it is very similar to demand in September and October 2007, the height of the previous up cycle.
 
Need more proof? According to Mark V. Lomanno, president, STR, lodging demand has come back almost all the way to where it was before the downturn.
 
“In July 2010, more rooms were sold than any month ever in the lodging industry. Transient leisure and transient business are back to where they were or higher,” says Lomanno, who also acknowledges ADR has not returned. “Demand is at 6.6 percent, the highest demand number in more than 20 years.”
 
In fact, demand has been so strong recently, both August and September set a record for selling the second most rooms in a month, ever.
 
STR’s numbers predict that, as 2010 winds down, the industry as a whole will see supply increase by 2.2 percent while occupancy will rise 4.4 percent. ADR will slip a negligible -0.1 percent while RevPAR jumps 4.3 percent. In 2011, supply will increase 1.1 while demand is predicted to increase 2.5 percent. Other 2011 predictions include occupancy rising 1.5 percent, ADR increasing 3.9 percent and RevPAR moving up 5.3 percent.
 
One CEO is seeing the demand phenomenon affecting his business. Hubert Joly, president & CEO, Carlson Hotels Worldwide, says corporate travel in particular has returned to levels not seen since the downturn began.
 
“Corporate travel is back; we took a beating in 2009. It is back, vibrant and growing in the teens. Corporations have decided that, to grow their business, they need to travel,” says Joly.
 
Finally, PKF’s Woodworth sees the lodging industry is heading in the right direction. “We think the industry has come off the bottom and we are moving through the trough. As we move forward, rates are beginning to get some traction,” he says. “But [fortunately] it won’t lead to meaningful levels of new development until 2013 or 2014.”