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The panic of 2008. Financial crisis impact on the lodging industry. Hospitality lawyer's take.
The Panic of 2008 and the $700 billion "bailout" -- now called TARP (Troubled Asset Relief Program) -- are events of historic proportion. As one Hospitality Lawyer, here's my take.
At the Phoenix Lodging Conference this past week, Mark Woodworth was among the first I have heard to cite the dictionary definition of "panic" and use it to describe the recent bank runs, near collapse of money market funds, and distrust that banks have on lending each other money. CNN, Fox News and other wire services were not far behind using "PANIC" to describe our current financial crisis.
These times are important to all Americans for a broad spectrum of reasons ranging from the impact on our personal and business taxes to the stability and liquidity of our entire financial system. But we also wonder what is happening to our hospitality industry. Here is the introduction to a series of articles on www.HotelLawBlog.com about where we are and where we are going.
The "Panic of 2008"
These are scary times. We all know the headlines:
. . . and now, in record time for such a big move, a $700 billion package to bailout the bad assets dragging down the balance sheets of U.S. financial institutions. The impact on the hospitality industry may be profound.
The Wall Street Journal has started comparing our current financial crisis with 4 of the all-time prior financial disasters: The Panic of 1792, The Panic of 1907, The Great Depression, and Savings & Loan Crisis. By the sheer size of the bailout legislation or rescue legislation, or whatever you choose to call it, this is certainly a situation of "historic proportions."
Additional stresses on the hospitality industry
On top of the "financial crisis" the hospitality industry faces additional stress factors, declining GDP and travel, sagging consumer confidence, high oil prices, reduced airline capacity, and new supply growth of hotel rooms now projected to increase at about 2.5% per year -- well above 20 year norms. Unfortunately, there is a well-established negative correlation between these factors and deterioration in the hospitality industry.
For a fuller discussion and documentation on how the hospitality industry's prospects are affected by these factors, see
In the next few postings, I will share with you some of the data I picked up last week at the Phoenix Lodging Conference and the implications for both our short- and long-term future in the hotel business.
Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $50 billion of hotel transactions, involving more than 1,000 properties all over the world. For more information, please contact Jim Butler at firstname.lastname@example.org or 310.201.3526.
Jim Butler is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" or "hotel mixed-use" or "condo hotel lawyer" and you will see why.
Jim devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM's Global Hospitality Group® -- a team of 50 seasoned professionals with more than $50 billion of hotel transactional experience, involving more than 1,000 properties located around the globe. In the last 5 years alone, Jim and his team have assisted clients with more than 100 hotel mixed-use projects -- frequently integrated with energizing lifestyle elements.
Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.
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