Occupancy rates nationwide hovered below 60 percent this past summer, the lowest levels since the terrorist attacks of Sept. 11, 2001. During the same time frame, hotel revenues per available rooms have dropped by nearly 20 percent to less than $60, the steepest decline in 22 years, according to industry reports. Hotel analysts don’t expect the industry to rebound until 2011 or later.
The only repeat guests that hoteliers would prefer not return in 2010 is the ghosts of guests' past. In a Bloomberg report, Expedia.com, the largest online travel agency said an "overhang" of hotel rooms being built will depress prices through 2010 following the biggest first-half drop in room rates since over five years. Smith Travel Research is holding firm to its forecast of continued hotel occupancy, revenue and rate declines through 2010.
With all these challenges, a new breed of hotel Management Company is required to rethink the traditional business models and aggressively make readjustments where necessary. One such firm is Origin Hotel Group of Atlanta, Georgia. Founder and President, B.J. Patel and his team, with a thorough background in hotel operations, acquisitions, finance, and asset management brings with him the expertise that assures investors and stakeholders in today’s economic milieu that they can realistically assess a hotel’s future potential to strategically help determine the best selling price for the asset.
Patel’s vision for Origin Hotel Group is to become a fully integrated hotel management, acquisitions and development company that builds wealth and drives profitability for its investors and partners. Since the hotel industry is dynamic and business fluctuates according to economic cycles, OHG feels strongly that it has a greater potential of a greater ROI when it stays involved on all fronts by being fully integrated.
What this means for hotel owners regarding third-party management contracts is OHG, as an aggressive hotel management team can offer very flexible and attractive terms and conditions to assist owners seeking or changing management companies. Their hands-on approach to management eliminates all the added infrastructure costs and hidden fees associated with larger hotel management companies, and their reaction time to day-to-day operational issues are more immediate and expeditious.
On the acquisition side, according to Patel, “even if you are acquiring a property for the right price, being able to sustain the property through the remaining declining months is important.” Sellers are becoming aware that if they have to sell a hotel in today’s environment, they need to come to market at a price that makes sense to both buyer and lender. OHG is an active and aggressive buyer who is looking to grow. OHG welcomes sellers to contact them directly if they’re interested in selling their hotels.
Since OHG seeks additional equity partners and investors who need an operating partner to acquire hotels, OHG can lead the entire acquisition process from start to finish, including: sourcing, purchase agreement negotiations, franchise property improvement plans and market and hotel due diligence. In turn, OHG seeks hotel management contracts where they will be able to guide owners through this economic downturn to achieve revenue and profitability targets.
B.J. notes, “the rewards of acquiring a property right now at a good price and adequate capital will limit added risk of negative or close to negative cash flow until the hotel’s performance and the market improves.” Additionally he adds, “depending on the deal, if a calculated risk with good due diligence and complete analysis is taken, it could prove to be fruitful in the long run.” In so doing, OHG can help sellers extricate themselves from the market in advance of the continual decline.
Patel believes it’s absolutely essential to assess what’s happening with the property’s performance on a monthly and weekly basis, “keeping a close watch on new supply coming into any given market, and getting a good understanding of what drives the local economy and resulting hotel demand, now and in the coming months.”
While sellers are still cautious about selling too low, Patel’s team has the keen insight to determine which “markets are significantly over supplied and will take more time to recover.” He asserts that “overall, what happens in the next few months will be a good gauge of the outlook for 2010.” For both sellers and acquisition partners it’s important to engage with a hotel management company that can make these types of ongoing assessments in this current business climate, but also consider the long-term profit potential of the property. Origin Hotel Group is that new breed of hotel companies who knows how to make that happen.
About Origin Hotel Group
Origin Hotel Group (“OHG”), as the name implies, is a distinctive hotel management company that, at the point of origin, is focused on building and maintaining long-term and lasting business relationships with its investors, owners and brands. Relationships that will endure the test of time are essential to our core values.
Currently headquartered in Atlanta, Georgia, OHG provides third party management services and seeks acquisition & development opportunities in GA, SC, AL, TN, NC, and FL.
With respect to acquisitions, OHG has negotiated partnerships, and is open to discussing future partnerships, with equity investors who seek a management company as an operating partner for the hotels they acquire. OHG will contribute a percentage equity stake in all joint ventures.
OHG will also seek strictly third party hotel management partnerships with interested developers, owners, and investors for existing or future properties. The company will focus on midscale and upscale hotel brands that feature up to 150 rooms with or without food and beverage and meeting space facilities.
B.J. Patel, Founder, President Origin Hotel Group
2451 Cumberland Pkwy, Suite 3409
Atlanta, GA 30339, USA
P: 404-437-6434 / F: 1-866-662-4689