Responding to the impact of the financial crisis on the hotel industry, the task force is an interdisciplinary team with the specialized legal and industry skills, experience, and resources to meet the needs of clients. Clients who own, hold, manage, or will take control of troubled hotel assets.

The Task Force will assist hotel owners, lenders, special servicers, their asset management firms, and other stakeholders with the restructuring of hotel loans and the positioning, transition, and disposition of distressed or foreclosed hotel assets. The Task Force will also assist new investors seeking to acquire and reposition troubled hotel assets in anticipation of the eventual recovery.

The hotel industry is bracing for a predicted RevPar decline of 7.8% nationwide in 2009. Because the still-unfolding economic downturn has no recent historical equivalent, even this projection may be understated, and certain markets will certainly suffer greater damage than the nationwide average.

The declines, combined with increasing cap rates, will result in a substantial reduction in the value of hotel assets. Leveraged hotels will face difficulty meeting debt service, and a significant percentage of all hotels will fail to satisfy debt ratio requirements and other loan covenants. Hotel owners with significant equity still at risk will need to employ a coherent strategy to protect their investments.

Lenders, special servicers, and other stakeholders will need to do the same, and, if they inherit and assume direct responsibility for hotel assets, they will need to stabilize, manage, and market these complex businesses.

New investors will need to exercise intelligence and diligence to navigate the hotel industry, make good choices, and avoid dangers as they seek to acquire and turn around troubled hotel assets.

Graham & Dunn's Hospitality Industry Group

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