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Phil Gordon
We didn't excel in Econ 102, but even we know that limited supply and steady demand is a good thing. That's exactly what's happening in the hotel industry, Perkins Coie partner Phil Gordon tells us. Perkins Coie has counseled clients like CWCapital, LNR Partners, and Strategic Hotels in $5B worth of transactions and financings so far this year. Phil attributes much of the new action to recovering REIT stock prices and debt availability, which have caused investors to recognize that revenues are moving up. And with only a handful of new hotels being developed, much of the capital is going toward refinancing (where Perkins Coie has done $1.75B this year).
Del Coronado
Phil says the flood of 2011 transactions kicked off with the financing of the Del Coronado Hotel & Resort in San Diego and continue to include lots of high-end hotels. He sees New York as a price leader for hotels right now because there isn't much room for new development. Even though Chicago just had the JW Marriott open and will soon see the Langham join its ranks, hotel room rates are rising in the city, a good signal for investors. (People need a place to stay when they go on their Ferris Bueller sites tour.) "Hotels have the shortest leases and therefore react the quickest," Phil says. "Room prices are changing all the time. Now that there's more business travel, they're back up."