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FOR IMMEDIATE RELEASE:
CONTACT: CINDY OLCOTT, 732-935-9553
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A NEW HORIZON
by Glenn Haussman,
Hotel Interactive
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Even in the best of times, certain hoteliers can't pay their bills. The reasons are myriad. Sometimes the management was ineffective or just plain wrong, sometimes the infrastructure is outdated, and occasionally a property has been so neglected it has fallen into disrepair; repelling guests from committing to a stay.
Eventually these hotels are taken back from owners by either a financial institution or even the U.S. Government via the Internal Revenue Service. But since these entities are not in the hotel management business they want to flip them as soon as possible. However, flipping a poorly managed or aesthetically outdated property is a complicated process requiring a specialist.
It's that niche where operators such as Horizon Hotels Management have found a sweet spot. "Equity investors are holding on for everything they can. They don't want to have a fire sale," said Cindy Olcott, President and CEO of Horizon Hotels, a company which she co-founded with her father, Mr. Stanley Cox in 1976.
The company currently manages dozens of properties with a mix of long term contracts and short term projects. Olcott said there is a lot of "churn" in this line of work, but the challenges of the projects are fulfilling and exciting. It's a matter of always dealing with new and interesting challenges.
"Every project is different. You don't know going in what the issues are with a property," said Olcott. "Many properties haven't been renovated and kept up. And it's not something that is done prior to the bank taking it over. So we have to go in there and make it saleable."
Horizon works with lenders such as Metropolitan Bank and Trust, Apollo Real Estate Advisors, Chase Manhattan Bank, Winthrop Financial Associates, Prudential Realty, Equitable Bank and Lennar Partners. They are attracted to the work Olcott and her team does, but also being a certified woman owned business adds another layer of marketability. More companies are looking to expand their partnership with minority owned organizations, and this creates a win-win scenario.
Though many people think about economy, budget and mid-scale properties being the ones most likely to fall into a repossession situation, Olcott said the top end of the market is an area that's seeing more problems than is currently being reported in the press.
"There is such a market for these properties even though they may have been overbuilt. The appreciation of valuations combined with money chasing deals is creating a unique situation. Investors are getting equity partners and have to refinance the deal just to sustain them. It's causing a lot of churn at the top of the market," explained Olcott, noting that many properties are currently overvalued compared to their condition and cash flow. She said inflation and the value of the dollar is sustaining an unsustainable situation.
Finding success in this arena takes tremendous discipline, said Olcott. It's a matter of looking at each project objectively. "Having a preconceived notion on a hotel is dangerous.
When turning a property around, Olcott espouses a commitment to the employees at the property. But it's also critical to have the right people in the job. She believes that employees are a hotel's greatest resource yet too many owners or managers don't hire the right people and then skimp on proper training. Without those elements no property can be saved in the long term; even with a multi-million renovation investment.
"When you go on the cheap it is a recipe for disaster. The consumer knows what they want in service and comfort and what they will pay for it," said Olcott.
Dealing with outdated infrastructure proves its own challenges, and Olcott has some advice for those wanting to fix up undersized guestrooms. She also wont invest n overpriced entertainment systems, instead she'd rather put money into helping guests enjoy the entertainment they are now bringing with them. Adding plasma or LCD television screens is a must and in the bathroom add differentiating amenities such as a shower with five or six heads.
"You have to recognize your audience and create experiences for those people. Too many people do not focus on this," Olcott said.
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