Clients Ask Brokers for More Advisory Services

Thirty-five professional lodging-property brokerage companies gathered in Atlanta in late June and gained broad perspective on the national hotel climate of the 1990s. The mood of the conference was upbeat, as broker after broker spoke of being inundated with salable properties from owners anxious for their services.

It seems that in today's highly competitive, illiquid and uncertain marketplace, many institutional and individual owners have decided that it's time to sell. However, brokers almost uniformly reported a strong need to be selective about which assignments they accepted. Today's market requires owners to be realistic about their property-value expectations.

Advisory Services Demanded

Brokers are experiencing a growing market demand to provide solid, professional advisory services to clients. These services include hold/sell analyses, market-value opinions, mortgagee re-negotiations, suggestions on franchise-affiliation alternatives, deal structuring and so forth.

Speakers at the conference advised brokers to shift their thinking from traditional, pure brokerage to more hospitality-real-estate advising. A hospitality-real-estate advisor is hired on a fee basis to provide a variety of services that hotel brokers are knowledgeable about.

Brokers affiliated with Hotel & Motel Brokers of America are reporting a significant increase in demand for the oft-neglected advisory-services portion of their business. However, they were reminded to be selective about the brokerage business they take on.

Quality, Not Quantity

With so many brokerage opportunities being presented, the only way to be effective on behalf of selling clients is to decide which properties can be successfully marketed in today's unforgiving and highly value-oriented marketplace.

Brokers cautioned one another about taking on too much business just because it's available. The result could be harmful to clients with fairly priced properties to sell and clients who require hospitality-advisory services.

Brokers recently have seen business "walk in the door." While finding customers with cash is more difficult than in more-optimistic past markets, the hotel-operator customer is still looking for opportunities. As the HMBA brokers' customer base has traditionally been those hotel operators - rather than tax-oriented syndicators - they have their fingers on today's hotel-acquisition marketplace.

Interestingly, many brokers find that owners who feel forced to sell do have alternative courses of action. Brokers report that they often recommend alternatives such as mortgagee re-negotiation, providing professional hotel-management alternatives to continued owner-operation, Chapter 11 restructuring advice and so forth.

Naturally, brokers who spend their lives steeped in lodging-property brokerage are conversant advisors with broad experience in many of these areas.

Business Is Brisk

In summary, the ringing message of HMBA's midyear meeting was to be very selective in taking on brokerage business charge a fair price for all services and broaden the range of hospitality advisory services offered to clients. Needless to say, business is brisk for hotel-brokerage and advisory companies these days.

Copyright © 1998. All rights reserved.