Prism to Manage 12-Property Hotel Portfolio Across Three States
- Feb 24, 2012
February 24, 2012
By Barbra Murray, Contributing Editor
Prism Hotels & Resorts’ management responsibilities have just expanded by 1,877 guestrooms, now that the company has taken on an assignment from a New York-based REIT to oversee a group of 12 full-service hotels in Pennsylvania, Maryland and North Carolina.
“We’ve been working with this REIT for several months in anticipation of transitioning these hotels onto their balance sheet,” Kevin Gallagher, senior vice president, business development with Prism, told Commercial Property Executive. The REIT has gone from the portfolio’s lender to its owner and has placed the future success of the properties — which fly the flags of Courtyard by Marriott, Four Points by Sheraton and Holiday Inn — in the hands of Prism.
With a management portfolio of 52 branded and independent hotels across the country and a strong hotel receivership practice, Prism certainly has the skills and experience to triumph in its new assignment amid a national hotel sector that has not yet fully rebounded. “There’s reasonable optimism across the board that there’s a recovery, but the industry is down, travel is down,” Gallagher said. “Probably the biggest challenge is that the downturn was so significant that incremental recovery is deceiving. It’s going to take a lot for RevPAR to get back to where it was and thus be recovered. It’s improving but we don’t’ know how long that’s going to take and with the uncertainty of the economy and the election coming up, there’s apprehension.”
Market research supports Gallagher’s point. PKF Hospitality Research noted in a recent forecast that while many hoteliers are feeling the angst that comes with “intimidating macroeconomic conditions,” recovery continues. PKF forecasts a 6.1 percent increase in RevPAR for 2012, following the 8.1 percent increase in 2011.
But less-than-stellar RevPAR is just one obstacle the industry faces today. “The component that makes it even more difficult is most hotels need capital improvements, and they range from guestroom soft goods to lobby renovations to exterior cosmetics,” Gallagher noted. “In general, our industry is under-renovated and there’s a looming Property Improvement Plan problem. Your travelers right now — and it’s not just the CEO types, it’s everybody — have grown accustomed to upscale finishes in bathrooms, they’ve grown accustomed to big TVs, they’ve grown accustomed to really nice beds and really nice bedding. So the two issues the hotel industry is faced with is that we still have depressed RevPARs and yet there’s the essential need for renovations.”
However, he added, the hotel market is bolstered by the limited increase in new product. “We’re enthusiastic that the supply chain has been slowed down. It hurts a lot of service providers, construction companies and manufacturers, but it’s healthy for the industry in the long run.”
“We’re bullish on our industry,” Gallagher said. “The long view is still healthy.”