Optimum Hotel Brokerage

Thoughts on Success and Penn State

2011-11-15T10:11:00.000-08:00

On November 13, 2011 I had the privilege of hosting Randy Smith, founder of Smith Travel Research as the Penn State Hotel and Restaurant Society's annual Hospitality Executive of the Year reception at New York University's Kimmel Center. The ceremony is one of PSHRS's signature event, held in conjunction with the International Hotel, Motel & Restaurant Show in New York City. The event is attended by alumni, faculty, supporters, friends and more than 100 students of Penn State's School of Hospitality Management.

Given the emotion and and controversy surrounding the recent events at Penn State, I was compelled to address the events and their effect on the school. What casual observers of the situation do not realize (nor do our country's sensationalistic and sedentary media) is the effect of these events have on our students, most of whom were about eight or ten years old when the alleged incidents occurred.

I have never been recognized as a gifted orator, but I felt that the students needed to have further clarity on the situation, hear how an alum views the events, and how the situation might have an effect on their lives as Penn State students.

Here is a text of the speech:

I couldn’t think of anyone more appropriate to honor as our Hospitality Executive of the Year than Randy Smith…but not only for the obvious reasons.

His contributions to the hotel industry are legendary:

· He created a global business that changed the way we look at our industry.
· He created a business model that has no competition.
· He’s contributed to the success of so many others in the industry.
· He’s helped us to truly understand the lodging business.
· And, his work has made a whole lot of money for a whole lot of people.

On the surface, it’s easy to see why Randy Smith is so successful.
But when you get to know Randy, you understand the deeper reasons why he is so admired. And all of us, particularly the students, should recognize the core qualities that make him not only a successful person, but a good and great person.

Here is what people admire about Randy:

· He is a person of unwavering ethical standards.
· He’s one who stands by his word.
· Despite his success, he’s a man of humility who’s connected to his roots.
· He knows the value of strong and meaningful relationships with others.
· He is a person who’s intellectually curious about the world around him
· He interacts in a stressful, complicated and changing world, yet knows the true sustaining value of family and friendships.
· He epitomizes the value of the simple, yet important things in life; like a sincere handshake, a hearty laugh, and the serenity one can reach at a quiet fishing hole on a lazy summer afternoon.

Those qualities are the ones that make him a shining example for all of us.

These are also the same qualities that Penn Staters embody, and that make us special too.

This is my last official function as president of the Penn State Hotel and Restaurant Society. It’s been a meaningful two years for me and I’m grateful that I have had to opportunity to return to Penn State. The past two years have allowed me to continue my education and return to a place I love, and be among people who share these feelings.

By far the most rewarding part of my tenure has been my interaction with the students of the School of Hospitality Management. Though our educational experiences are thirty years apart, we recognize our bond as Penn Staters, and the love and pride we share for this great institution.

When you’re a student, the future is promising, yet uncertain. You often wonder what the future will be, and if you are going to be a “success” in your life. I have news for you. You’re from Penn State. You will be successful. You are successful. We’re Penn Staters. That’s what we do.

But Penn Staters (much like Randy Smith) are not merely successful. Penn Staters have a higher calling:
They are Great, and they are Good.
Penn Staters know that Greatness without Goodness is not success.

I know you’ll be successful, but success has its responsibilities. The superficial illusion of success can separate us from the things we value and the connections we value in life. That illusion is not success. As you become more successful in your life, people will look at you differently, but don’t let your success distort who you are.

Penn Staters know what we have of value is at our core. It’s rooted in our families, in the communities where we grew up, the people we love and who are important to us. It’s rooted in Penn State.

We don’t interpret our success as some selfish sense of freedom. Achieving success is not some type of lifestyle, or some kind of license where we can go about and do anything we desire, with no connection or accountability to the people or institutions who make us who we are.

As you grow older you will encounter certain reckonings with the adult world, and that life often confronts us with difficult decisions, and we’re confronted with our own limitations, our fears, and compromises.

What makes Penn Staters Great and Good is our strong sense of accountability to the people, places and things we love. We’re accountable to our families, our communities, our classmates and the institutions we cherish. Penn Staters keep the faith, and we honor these things we value.

Penn Staters lead their lives with resiliency, and Penn Staters lead their lives with commitment.

So I am not going to just wish you success, and lots of money, and happiness in life. I am wishing that you continue the traditions that are the hallmarks of all Penn Staters:

Greatness….and Goodness.

Thank You.

2011-07-07T07:59:00.000-07:00

Here is an article I wrote for Vantage Hospitality's August Newsletter:

Buying Opportunities Abound in Bank REO Market

Now that many markets in the country have stabilized and a measurable recovery is underway, many astute hotel investors are searching for new lodging investment opportunities. A growing inventory of bank REO properties may be a good source of investment opportunities for investors seeking conversion opportunities for the Vantage family of brands.

In the arena of “distressed hotel assets”, many buyers still have misconceptions and need to educate themselves on how to buy bank REO assets. When a bank’s mortgage is not being paid by an owner, the bank can undertake foreclosure proceedings to gain legal control of the asset. In general, the bank takes possession via legal proceedings culminating with a sheriff’s sale, the period in foreclosure that begins a property’s redemption period.

REO (Real Estate Owned) commonly refers to property now owned by the lender from foreclosure of mortgages or trust deeds. These properties are usually for sale. Banks are not in the hotel business and they are naturally motivated to sell the asset and take it off their balance sheets.

How can you be a successful buyer of a bank REO hotel? Here are three simple rules:

Use a Professional Hotel Broker – The complete inventory of REO assets is not easy to find. The banking industry is large and diverse, and many banks do not publicize their troubled assets. Calling banks directly is usually futile. Successful buyers of REO assets use hotel brokers, like the member-brokers of Hotel Brokers International, to identify properties and guide a buyer successfully through the sales process.

Be Prepared – Bank REO’s are usually all cash deals with little due diligence and a quick closing. Good REO buyers have their equity readily available, have their legal counsel in place, have developed a plan for the asset, and are prepared to show the bank that the is buyer ready, willing and able to close the deal quickly.

Put Yourself in the Bank’s Shoes – Buying a hotel from a bank is not like buying a property from an individual owner. The bank’s goal is to dispose of the asset at its highest market value in a clean, efficient, non-contingent transaction. Banks are not influenced nor swayed by never-ending negotiation tactics and buyer game-playing. When you identify an asset and you want to buy it, give the bank your best, “as is” offer as your initial offer. Don’t expect to go back and forth with the bank. As unsuccessful REO bidders know, when it comes to REO sales, banks don’t say “no”. They say “next’ to another, more stable offer.

These simple rules don’t begin to scratch the surface of the complexities and considerations one must understand to capitalize on opportunities in bank REO hotel sales (another reason to rely on your HBI broker). When you better understand the landscape in the bank REO market, the better you are positioned to take advantage of the many buying opportunities in this growing inventory of hotels.

Welcome to the Optimum Hotel Brokerage Blogspace.

2011-01-20T11:50:00.001-08:00

Here is an aticle I wrote for America's Best Value Inns and Vantage Hospitality newsletter:
The hotel industry is entering 2011 with a renewed sense of optimism. After reaching a trough in mid-2009, lodging demand has rebounded more quickly, and average demand levels in 2010 are estimated to be only 1.1 percent behind 2007. This recent demand growth has set the stage for the next phase of recovery, which is expected to be driven by solid room rate growth. PricewaterhouseCoopers recent forecast predicts occupancy to increase 2.5% (after an increase of 5.7% in 2010), ADR to grow 4.8%, and RevPAR to increase by 7.4 percent, the highest since 2006.
This recovery is welcome news to hotel owners and investors who have been challenged by the effects of the worst economic recession in more than 75 years. Now that both the economy and industry performance are improving, astute investors are preparing for one of the best times to buy hotels in history. According to John O’Neill, Ph.D. of Penn State’s well-respected School of Hospitality Management and author of the highly regarded Penn State Index, 2011 hotel values will increase 7.5% industry-wide, and an impressive 11% in the economy segment.
There are further reasons why 2011 will present investors and owner/operators with the best buying climate in recent memory:
Financing: Lenders are returning to the industry. New and improved SBA 7A and USDA programs offer hotel buyers comfortable leverage and reduced fees. Interest rates remain low, and the lodging industry is attracting ever increasing interest from local and regional commercial banks.
Tax Treatment - The Small Business Jobs Act of 2010 allows for up to $500,000 in business expenses (as well as a 50% bonus on certain depreciable property) to be written off for 2011. The self-employed are also given additional preferential tax treatment for health care insurance expenses beginning in 2011.
In addition, brokers like the capable members of HBI: Hotel Brokers International are now listing and marketing many bank REO properties. Many of these properties in temporary financial distress will be sold at significant discounts. Acquisitions from bank REO departments are handled a bit differently than typical hotel purchases, so rely on your broker to guide you through the process.
Of course, many of the properties coming on the market in 2011 and 2012 will make excellent conversion opportunities for the America’s Best Value and the Vantage family of brands. By working with HBI brokers and Vantage’s franchise team, entrepreneurial hoteliers can capitalize on one of the best hotel investment climates ever seen.
Joe McCann is president of Philadelphia-based Optimum Hotel Brokerage LLC and president of Hotel Brokers International.