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Hotels really are a different animal or perhaps a bird, as the "Peacock" graphic below illustrates:

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As an operating business without the benefit of long term leases, hotels can be volatile. With a perishable inventory of rooms to be sold each night, sophisticated marketing tactics are critical. In good times, it is easy to make money; however, as the economy slows, and new supply enters the market, cash flows lessen, and tensions rise. This is particularly true for overleveraged hotels.

An experienced advisor will focus on the financial interests of ownership, cutting through the somtimes conflicting interests of the "constituents". The long-term and short-term objectives of the brand, the manager and the lender are not always in alignment. Sometimes litigation arises amongst lenders and owners and managers. So as this incredible 8 year up-cycle begins to slow, the wise owner will not solely rely on their management company, but will rather seek independent advice.

Likewise, lenders will seek consultants to protect their collateral and deal with the situation at hand. There is a myriad of issues a hotel lender must consider in a distressed situation, whether it is a foreclosure, loan modification, or a bankruptcy proceeding including:

  1. Collateral reviews
  2. Objective commentary on likely future cash flows
  3. Review of loan documents and key operating agreements
  4. Review of appraisals
  5. Capital expenditure reviews
  6. Formulation of negotiation tactics
  7. Consideration of strategic options as lender
  8. Litigation support
  9. Expert witness
  10. Assistance with asset/disposition strategies for REO properties
  11. With bankrupt hotels: assist in review of plans of reorganization
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James E. Fitzgerald has over 35 years of global experience creating value in the Real Estate and Hospitality Sectors. Mr. Fitzgerald is a highly skilled negotiator with deep expertise in consulting, finance, due diligence, loan origination, asset management, acquisitions, divestitures and workouts. He is a professional with an expansive network of relationships throughout the private equity, investment banking, real estate, legal, and hospitality communities.

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