December 8, 2008: Steve Rushmore, President, Founder, and CEO of HVS, the leading global hospitality services and consulting firm, proudly announced that 2008 proved to be another successful year for HVS despite the cautious optimism which was predicted a year ago. However, Rushmore’s outlook for the hotel industry in general is somber for 2009.
“The world-wide lodging industry is heading toward some very difficult and challenging times,” reports Rushmore. “The lack of credit and liquidity, coupled with a downturn in travel and spending, will have serious impact on the profitability of hotels. The relationships between hotel owners and lenders are going to be strained, and we will probably see some workouts, loan restructurings, foreclosures and bankruptcies.
“Our collective experience has spanned severe downturns in the past (1974,1991 and 2001), and the staff of HVS is ready to assist our clients in making the right decisions to minimize economic hardship and/or even produce financial benefits,” Rushmore continues. “Developing and implementing your strategy to survive and hopefully prosper during this downturn must be done immediately. HVS is ready to help.”
HVS is pleased to share the following 2008 success stories, which in many cases have prepared us to assist clients as we face the projected downturn of 2009:
We Cover the World:
- The opening of HVS Beijing, HVS’ third presence in China (Shanghai and Hong Kong), is of strategic importance in establishing our long term relationships with Chinese corporations based in the country’s Capital.
- HVS London conducted more than 300 assignments this past year, the majority of which were valuations or feasibility studies completed in Western Europe (50%) and the UK & Ireland (25%). Emerging markets in Central and Eastern Europe (including Russia and Kazakhstan) and Africa accounted for the remainder of work. Additionally, the London office has been involved in several management contract negotiations and a major asset management advisory role in Croatia on behalf of the owners of a group of resort hotels. HVS is providing the portfolio of hotels and restaurants with long-term strategic advice, financial counsel and other management guidance as well as hands-on assistance in implementing structural and operational changes.
- HVS Madrid has had a busy 2008 including the valuation this summer of 92 hotels in six weeks for a Spanish hotel company which needed the help of several HVS offices around the world, as well as a number of valuation and feasibility assignments in Spain, Portugal and other parts of Europe.
- This past year also witnessed the opening of HVS’ office in Dubai, which now handles the firm’s valuation and consulting work in the Middle East and North Africa. The HVS Dubai office conducted more than 45 assignments in its first year of operation, 65% of which were feasibility studies for mixed use developments featuring hotels, services apartments, branded residences and shared ownership. Notable assignments for HVS Dubai include the Strategic Advice for the Bawadi development which features around 5,000 rooms, Strategic Advice for Dubai Pearl development which is comprised of six luxury hotels, Strategic Advice for the 7 of the World Islands, and a in-depth sustainability study for Dubai for each sub market across the various hotel categories. Other appraisals included the Intercontinental in Cairo, the proposed St. Regis development in Cairo, the proposed Sofitel in Muscat, the Movenpick in Dubai, Holiday Inn in Muscat, and various other properties across the Middle East.
- Notable assignments for HVS Canada include the five Westin Hotels in Vancouver, Edmonton, Toronto and Ottawa. The office also appraised four Fairmont Hotels in 2008, and is about to appraise six hotels for the Temple REIT in Fort McMurray, Alberta. Other appraisals of significance include the Toronto Four Seasons, a proposed Morgan Hotel, and the under-construction Shangri-la Hotel. Vancouver appraisals include the Shangri-la, the Fairmont Pacific Rim, the Ritz Carlton and the new boutique Loden Hotel.
- Since 2007, HVS Mexico City has strengthened the firm’s presence in vital commercial, leisure, and second-home markets across Mexico, Central America, and the Caribbean. In 2008, HVS continued to advise domestic and foreign hotel developers, investors, lenders, and brands, on an array of projects in large cities, industrial hubs, and beach destinations. Given the appeal of Mexico as a second-home and retirement market for U.S. and Canadian baby boomers, HVS Mexico City has developed a strong platform in the analysis of master-planned projects that include hotel and residential components. In the current economic and financial environment, in which potential retirees’ access to U.S. financing is limited, HVS Mexico City is poised to assist developers and investors in evaluating alternative routes to successful mixed-use developments.
- HVS’ Mumbai and New Delhi offices continued their growth into 2008: The New Delhi office worked on 200+ assignments within India including successfully execution of Pan-India portfolio valuations for international Private Equity and Banking Institutions. HVS New Delhi was also given the exclusive mandate for recommending the development strategy and investor identification for the hospitality district within the New Delhi Airport’s Aerocity. In 2008, the New Delhi office launched its transaction advisory services that work on exclusive buy/sell mandates and equity placements for its clients. The Confederation of Indian Industries, an apex industry body, has selected representatives from the New Delhi Office in its core committee on tourism infrastructure. The New Delhi and Mumbai offices for Executive Search carried out numerous senior level searches in sectors of hospitality, real estate, healthcare.
- HVS Buenos Aires experienced a 100% growth in the number of assignments over 2007. The office conducted important assignments in several cities within Argentina, Colombia, Chile, Peru and Panama, including negotiations of management contracts with renowned international brands. Clients included the St. Regis Buenos Aires (the first hotel of the brand in South America, under development), Radisson Hotels & Resorts, Faena Group, Grupo Brescia - Libertador Hotels Peru- (Luxury Collection in Urubamba, Sacred Valley and Westin Libertador Lima, both under development), Hilton Buenos Aires, Abercrombie & Kent, amongst others. As part of the expansion plan, HVS Buenos Aires will be opening a new office in Bogota, Colombia in 2009.
In the United States:
- During 2008, HVS New York has been training its staff and re-tooling its studies to handle the current downturn in the U.S. hotel industry. Over the past several years, when economic trends were showing continued upward growth, performing hotel market studies and valuations were relatively simple --- establish a value and just extend the trend-line. Today, we are faced with a rising cost of capital, lack of sales data, massive illiquidity, and declining REVPAR. Accurate hotel valuations now require a complete understanding of all the different forces that impact the bottom line and investment criteria. This office has close to 30 years experience handling these cycles, and thus the NY office is prepared to assist hotel owners and lenders in making tough decisions regarding repositioning, downsizing, restructuring, foreclosure and bankruptcy.
- Following a record year appraising over 2,000 hotels in 2007, the Boulder office of HVS focused on more comprehensive consulting assignments in 2008. These included the development and implementation of impact models for two of the largest international hotel brands; planning the acquisition, renovation and strategic positioning of two economy hotels on opposite sides of the United States; performing the design/development and financing plans for a new build aloft and an upscale boutique hotel in two major Midwest markets; and performing the research and development to re-establish HVS Eco Services and reconfigure Ecotel for a 2009 launch in the United States.
- HVS’ Chicago office completed a successful first year of operation. In addition to standard valuations and consulting assignments, this office possesses expertise in luxury hotels, boutique hotels, military lodging, trends in the extended stay segment, tax-exempt bond funding for hotels, water park hotels, hotel conference centers and convention headquarter hotels.
- * Kathy Conroy celebrated her 10th year anniversary as Managing Director of HVS Miami in a year in which the office strengthened its presence in Central America. The region provided for a variety of assignments for varied assets that ranged from small inns to large mixed-use developments. These assets were located throughout Costa Rica, Panama, Honduras, and Belize. Additionally, growth in the Caribbean Region contributed to assignments in Aruba, the Bahamas, Barbados, Dominica, Dominican Republic, Grenada, Puerto Rico, St. Barths, St. Lucia, St. Maarten, Trinidad and the Turks and Caicos. Projects included a wide range of hotel/resort products from independent boutique properties to limited-service, all the way to the top luxury brands.
- HVS Washington, D.C. opened in May of 2008 to provide consulting and valuation services on hotels and mixed-use properties throughout the Mid-Atlantic. The new office kick-started its operations by publishing the HVS Employment – Hotel Growth Index, a tool for accurately forecasting room night growth based on employment growth in a metropolitan market, and held a symposium in D.C. to present it to industry representatives. The Washington, D.C. office has been involved in several major consulting and valuation projects, including Marriott’s proposed 1,127-key convention hotel, the Fairmont Hotel, and a highest-and-best-use study and valuation of the redevelopment of the historic Old Post Office Pavilion only two blocks from the White House.
- In late 2008, HVS Boston introduced property tax advisory services tailored to the lodging industry. By educating both assessors and owners on the intricacies of a fair and equitable property tax valuation, HVS can help ensure that hoteliers are not paying more than they rightfully owe in taxes on properties that may be overvalued—a crucial cost-saving measure in these hard times for the industry.
- Dallas is the only city in the U.S. with a major convention center but without an attached or adjacent headquarters hotel. In 2008, HVS Dallas served as consultant to the City of Dallas as it worked through decision-making processes with respect to the development of a multi-million-dollar headquarters hotel. These projects often meet with a mixture of public opposition and support, and such was the case in Dallas. HVS provided objective and responsive advice on the project’s potential to the City and its partners.
- HVS San Francisco undertook the analysis and valuation of several mixed-use resort developments including hotel, residential and fractional (PRC) uses. Consulting was performed for proposed developments, while valuations were performed for lenders focused on the restructuring of loans for assets under construction. Increasing its expertise in the valuation of visitor attractions, the office also performed an appraisal of the Aquarium of the Bay in San Francisco. HVS San Francisco undertook a number of appraisals for special servicers who are dealing with hotel foreclosures and loan restructurings, and the office also performed “value in use” appraisals, pursuant to International Accounting Standard 36 of the International Financial Reporting Standards, for international, publicly traded companies.
We are the Industry Leaders in Worldwide Hospitality (Investment) Conferences:
- The China Hotel Investment Summit 2008, organized by HVS Shanghai and held at the Grand Hyatt there, was a great success, where 650 delegates from over 20 countries met to network, share new ideas and explore new opportunities.
- HVS London continues to take a major presence as both sponsors and speakers at the three leading European hotel investment conferences - in Berlin, Rome and Moscow - as well as the Arabian Hotel Investment Conference in Dubai.
- The Arabian Hotel Investment Conference held in May in Dubai was sponsored by HVS Dubai and London. The conference was a great success and attracted some 800 delegates from around the globe. The next AHIC is scheduled next year for 2-4 May.
- As has been tradition, HVS New York continues to serve as a patron of the NYU Hospitality Investment Conference where Rushmore is featured as one of the opening session speakers. HVS New York executive Vice President Dorothy Jennings is the Conference Coordinator for this event and Steve Rushmore serves on the executive planning committee.
- The Hotel Investment Conference South Asia (HICSA) was officiated by HVS New Delhi, which hosted nearly 600 attendees and 13 global CEOs of major hotel brands. The 5th edition of HICSA is scheduled in on 1st and 2nd April 2009 at Grand Hyatt, Mumbai. .
- The Buenos Aires office held the 1st South American Hotel & Tourism Investment Conference (SAHIC) in Buenos Aires, Argentina on September 29 - 30. The event was a great success with over 350 attendees from more than 25 countries around the world and the support of major brands. The second annual conference is scheduled next year for September 14 - 15, 2009.
- HVS Miami participated in panels at a variety of conferences this year including: Kathy Conroy’s participation at the Central America Tourism & Hotel Investment Exchange in Guatemala City in April on a panel entitled ‘Vacation Ownership --The Piece of the Puzzle that can make the Project Work’; John Lancet’s participation at ALIS addressing ‘The business case for vacation ownership units in the mixed-use project´ , “How do you evaluate the economics of various vacation ownership components?’ at the Caribbean Hotel & Tourism Investment Conference in Trinidad, and the ‘Mexico-Exotic, mysterious, spicy, and bustling’ panel at the 1st annual Hispanic Hotel Owners’ Associate Conference in Miami in October; Andrew Cohan moderated the ‘EcoTourism, EcoResorts, and Eco Destinations’ panel at HVS’ Buenos Aires conference in September and served as a panelist at the ‘Roundtable: Perspectives on the Global and Costa Rican Tourism Industries’ at the 3rd annual Costa Rican Tourism Investment Summit. Additionally, HVS Miami served as a patron sponsor of Interval International’s 10th Annual Vacation Ownership Investment Conference.
HVS Has the Expertise:
- HVS Convention, Sports & Entertainment Facilities Consulting performed studies for some of the major convention centers in the world in 2008, including an economic impact study for the Walter E. Washington Convention Center in Washington D.C. and a study to refund the debt of the Dallas Convention Center Complex. This division also assisted with potential convention center hotel developments at Chicago’s McCormick Place and the Virginia Beach Convention Center. Sports projects included an operational analysis of the Alamodome in San Antonio, Texas and feasibility of a Sports Center in Albertisa, Hungary. As for work with Performing Arts Centers, HVS analyzed the financial operations of the Long Center for the Performing Arts in Austin, Texas and a feasibility study of a new performing arts center in Manchester, New Hampshire.
- HVS Shared Ownership Services continued to grow and provided a diversity of services over a wide geographic area -- from Canada to Uruguay to the United Arab Emirates. The division also analyzed emerging markets such Placencia, Belize and Roatan, Honduras. HVS SOS consulted for Residential Cruise Lines for their fractional offering aboard the luxury cruise liner, the Magellan. And, the division consulted on a wide range of shared ownership business models for projects in several countries in Europe and the Middle East including Israel, Italy, Malta, Montenegro, Morocco, Bahrain, Dubai, France, Spain and Switzerland.
- January 2009 marks the opening of an HVS office in Las Vegas for the Gaming Services Division. This move to the epicenter of gaming worldwide will continue the expansion of HVS Gaming Services to our domestic and international clients. In the meantime, HVS Gaming Services completed an appraisal of the Venetian Macao, the largest casino hotel in the world, the Sands Macao and a number of other casino hotels under development in Macau, China.
- HVS Executive Search offices in New York, London, Hong Kong, New Delhi, Moscow and Mumbai completed nearly 200 searches for the hotel, restaurant, retail and gaming industries. Some noted clients include HEI Hotels & Resorts, Hilton, Jumeirah, KOR Hotel Group, Apollo Management, Libra Holdings, Rezidor, Oberoi Hotels & Resorts, Stein Group International, Fairmont, and Westmont Hospitality Group.
- HVS Golf Services had a groundbreaking year, as the division teamed with other HVS offices on luxury golf resort residential development projects in Asia, the Caribbean, Central America, Europe and North America. These projects included the $1.25 billion golf resort community at Cat Island, and consulting for the Bellayre development in Upstate New York. On the golf front, the division appraised the Oceanico portfolio of golf courses, one of the largest golf holdings in Europe, with several trophy properties including the site of the Portugal Masters.
- The Food and Beverage Services division worked on a variety of consulting and appraisal assignments in 2008 for banquet facilities, free-standing restaurants, dining clubs, and hotels with large volumes of food and beverage revenue. The projects were spread across the US, including Tucson, Long Island, Austin, Durham, Louisville, Rockford, Grand Rapids, Boulder, Sacramento, Taos and Saratoga Springs.
- HVScompass Design continued to design more luxury and boutique projects in 2008. Gaining recognition in the boutique segment, HVScompass designed the newly-opened, historic George Washington Hotel in Winchester, VA. The firm was also chosen to design the guestrooms and suites renovation at the legendary Willard InterContinental Hotel in downtown Washington, DC. Some of the company’s project openings this year include the Hyatt Regency, Buffalo, NY; Courtyard by Marriott, Newport News, VA; Residence Inn, Newport News, VA; Courtyard by Marriott, Jackson, TN; and aloft Hotel, Rancho Cucamonga, CA. HVScompass also relocated its corporate office in July this year. The new office suite was custom-designed by HVScompass staff and is designed to be LEED-certified.
- HVS Asset Management continues to assist the City of Indianapolis regarding its investment in the 1,000-room J.W. Marriott Convention Center hotel that is under construction and scheduled to open early 2011. Additionally, this division of HVS continues to oversee Marriott International’s management of the 500-room Renaissance Hotel and Convention Center located in Schaumburg, Illinois. The asset is currently ranked number one in customer satisfaction in the Renaissance Brand portfolio.
- 20|20 Assessment™ (www.2020skills.com) – a service of HVS – added over twenty new survey and coaching clients in 2008, such as Heartland Brewery, Francis Ford Coppola Presents, Royal Caribbean Cruises, Qdoba Mexican Grill and Occidental Hotels and Resorts. The company also expanded its service line to include leading-edge Employee Opinion and Customer Satisfaction Surveys, Employee Performance Reviews, specialized market research and coaching services for both employee and organizational development. All of the company’s services and products are specifically designed for the service-hospitality industry. 20|20 Assessment™ also established two major research partnerships on leadership and peak performance with New York University’s Preston Robert Tisch Center for Hospitality, Tourism and Sports Management and César Ritz Colleges Switzerland.
Established in 1980, HVS experts literally “wrote the book” on how to value hotels, shared ownership products, restaurants, and more. Hotel owners, operators, lenders, banks, and management companies all turn to HVS as the respected authority on hospitality. We possess detailed knowledge and experience in the markets where we have a presence, and in the regions in between. Whatever the real estate or consulting need, HVS associates possess experience in a wide range of hospitality and operational disciplines. Our entrepreneurial mindset and company-wide philosophy allow us to think as if we were owners and operators ourselves. We know this approach best suits our clients’ needs.
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