August 26, 2026 • 20 mins
Four decades in this business have taught Daniel Lesser to not to fear uncertainty. From the Cuban Missile Crisis to COVID, despite dire warnings, the hospitality industry recovers and comes back stronger every time. This episode of the Distinguished Podcast was recorded on the road at the NYU International Hospitality Investment Forum in New York City, with guest host Kaushik Vardharajan, Director of Boston University School of Hospitality’s Real Estate Program.
Daniel is Co-founder, President, and CEO of LW Hospitality Advisors, and one of the most widely quoted voices in lodging investment. In this conversation, he moves from the top line to the bottom line, discussing topics such as:
- How to find the opportunities in distressed markets
- Preventing the proliferation of brands from cannibalizing the parent brand
- Why he stays so bullish on San Francisco and New York
The “Distinguished” podcast is produced by Boston University School of Hospitality Administration.
Host: Arun Upneja, Dean
Producer: Mara Littman, Executive Director of Strategic Operations and Corporate Relations
Research and Content Creation: Lan Lu
Marketing: Anne Dawson
Editing: Isabella Laikin and James Leon
Music: “Airport Lounge" Kevin MacLeod (incompetech.com)
Licensed under Creative Commons: By Attribution 4.0 License
http://creativecommons.org/licenses/by/4.0
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Episode Transcript
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SPEAKER_00 (00:05):
Four decades in this business have taught Dan Lesser
to be suspicious of the wordeveryone keeps using,
uncertainty.
From the Cuban missile crisis toCOVID, he has watched the
industry get written off andcome back bigger every time.
This is the distinguishedpodcast from the Boston
University School of HospitalityAdministration on the road at
(00:28):
the NYU InternationalHospitality Investment Forum in
New York City, with guest hostKashikwardharajan, director of a
real estate program.
Dan is co-founder, president,and CEO of LW Hospitality
Advisors, and one of the mostwidely quoted voices in lodging
investment.
(00:48):
In this conversation, he movesfrom the top line to the bottom
line, explains why today'sdistress looks more like a wall
of maturities than a fire sale,makes his case that the industry
simply has too many brands, andtells us why he stays so bullish
on San Francisco and New York.
Let's dive in.
SPEAKER_02 (01:10):
So we are at the NYU IHIF conference, and I'm here
with Daniel Lesser, co-founder,president, and CEO of LW
Hospitality Advisors.
Daniel, thank you for making thetime to join us.
Thank you for inviting me.
It's great to be here and greatto see you.
So, Daniel, let's dive into it.
We have a busy conference, sowe'll get you out of here
(01:32):
quickly.
So let me start by asking you uhto just give us a general
overview of what you're seeingin the hospitality industry
today from a top line and abottom line perspective.
SPEAKER_01 (01:45):
Top line is is is doing fairly well.
Uh we all are aware that uh umRevPPAR is is growing, but very,
very modestly.
And for the most part, that'sattributable to the average rate
side of the equation.
So generally speaking, grossrevenues are pretty steady-etty
(02:09):
and doing well.
Where a lot of owners andoperators are having challenges
in certain assets and certainmarkets, is bringing it down to
the bottom line.
And we've all heard a lot aboutlabor, the cost of labor, uh, in
union markets, uh uh work rules,the lack of labor is putting
(02:31):
tremendous pressure on uh thosecosts within the lodging
industry.
And then you bake in risingenergy costs, rising property
tax costs, uh rising insurancepremiums.
The industry is being challengedfrom a bottom line perspective
in terms of growing the bottomline.
(02:52):
Uh we've seen lots of assets andsubmarkets where revenues are
increasing slower than expenses.
Well, that's not a durablebusiness model.
How long can you can you dothat?
And so uh there are definitelysome challenges out there.
There's no question about it.
But challenges createopportunities, and there is an
(03:13):
enormous amount of capital outthere, both on the debt and the
equity side, looking to uhdeploy to solve a lot of these
challenges that existing ownersand operators are facing.
With maturities coming due, thecan is no longer being kicked
down the road.
And so we're seeing we're seeinglots of transactions that are
(03:34):
coming to market that are, Iwouldn't call them distressed,
but they're definitely forced.
And there's a lot of money outthere, as I said a minute ago.
And so the notion of stealingproperty in terms of pricing,
it's really very difficult tofind because anything that has a
good story to it in terms ofopportunity uh is going to
(03:57):
ultimately get bit up.
So you may have a distressedfinancial structure of a hotel,
it's operating fine, but the thecapital stack needs to be
redone.
And the the the time has comewhere lenders are no longer, you
know, playing nicely in thesandbox like they did during
(04:19):
COVID, which they should havedone back then.
And so you have this wall ofmaturities that is in fact
coming.
I know we've been hearing thisfor a while, but you just look
at the data, there's a lot of itcoming.
Uh, and there's a lot of capitalon the other side to uh take
advantage of theseopportunities.
We're seeing all sorts of tradesthat are way below replacement
cost.
I think you know I'm a big fanof San Francisco.
(04:41):
I have been for quite some timein terms of where I believe
opportunity lies.
And Blackstone recently boughtthe four Caesars there for a
fraction of replacement cost.
That's just a you know oneexample.
Um Gencom has made a huge bet inNew York City, having purchased
three hotels over the past 18months.
(05:02):
The uh Intercontinental on 8thAvenue, the Ritz-Carlton Times
uh Central Park South, and theuh Thompson Hotel on 57th.
So you have these smart,sophisticated investors, both on
again, on the debt and theequity side, uh seeing that
there's there's upside uh at acertain basis.
(05:23):
And so we're seeing repricinggoing on.
There's no question about it.
SPEAKER_02 (05:26):
Yeah, that's great.
And I think I thoroughly enjoyyour quarterly surveys that you
send out.
Thank you.
And I was looking at your Q12026 survey, and we showed that
110 hotels sold, all over$10million, 100 and a 64% jump in
dollar volume, a 30% increase inprice per room compared to the
(05:47):
same quarter in 25.
So are we at that stage wherekind of kick the can down the
road is done and you're startingto see transactions start to
happen and sellers saying, okay,let's sell.
SPEAKER_01 (05:59):
You know, it's interesting.
I uh well, first of all, thankyou for those compliments about
the quarterly survey.
Um, we've heard a lot of noiseover the past uh 18 months, if
you will, about the transactionmarket being slow.
And as I track the data on aquarterly basis, if you look
back over the past five or sixyears, and I have a chart that
(06:19):
illustrates this.
Um if you don't consider 2020and 2021, if you look at the
metrics of assets that aretrading now uh in terms of total
dollar volume, it's right wherein the range of where it was
pre-COVID.
What has changed, however, isdeal size.
(06:42):
So the volume's there, but it'sit's uh it's it tends to be
smaller transactions thanpre-COVID.
Now, with that being said,there's still on some very
substantial large assets thathave been trading uh and
refinancing.
The diplomat in in uh in inFlorida, in Hollywood.
(07:04):
Um uh uh the what's the propertyon uh the uh Park Hyde, Beaver
Creek just sold 900,000 a room.
So you know you you'redefinitely seeing some fairly uh
substantial assets um that aretrading way below replacement
cost.
SPEAKER_02 (07:23):
Yeah, and I think that's an encouraging sign.
Hopefully, other investors areseeing these big institutional
players, these big bets, andwill hopefully follow through on
other transaction activity.
SPEAKER_01 (07:36):
I I I think when we look back on this year, we're
gonna see a fairly robust marketthis year as well, no different
than we saw last year.
Okay.
SPEAKER_02 (07:44):
Uh so Daniel, you've been known for saying that our
lodging sector is crowded withundifferentiated brands.
Previously, common wisdom wasthat if you were at a branded
hotel, you got a 10 to 15%premium in terms of valuation.
Are you seeing that compresswith all of these brands in the
(08:05):
market?
And how do you how do you viewthat sentiment now?
SPEAKER_01 (08:09):
Great question.
Uh it candidly boils down toreally a specific asset and a
specific location.
The the hotel business alwayshas been a street corner
neighborhood business.
We're sitting in Manhattan rightnow, right, in the heart of
Times Square.
The Times Square hotel market isvery different than Lower
(08:30):
Manhattan in the financialdistrict.
Those are two very differentmarkets, and yet they're both in
New York.
So you really have to look on amarket by market, actually a
submarket basis and individualum individual basis.
And you know, so with so manybrands today.
(08:50):
Uh there are way too many brandsout there.
I've been saying this for years,and uh, I guess Hilton today
just formally announced the uhundergraduate.
Undergraduate, right?
They have graduateundergraduate.
Um I don't really understand uhI mean, I know why they're doing
it, and I think we all know whythey're doing it, right?
They're they're grasping forfees, right?
(09:12):
They're publicly held, they'rethey're under pressure to
produce earnings.
Um and so I've actually heard aum uh a not to be named
franchise salesperson in thehotel space articulate that uh
in answer to a question relativeto how do you decide when when
(09:33):
to come up with a new brand, andthe answer was very
straightforward.
When we run out of white spacewhen we can't plant the pin, we
come up with a new brand.
That's not economically andfinancially the way the markets
work.
And it's a little bit backwards.
In any event, there are too manybrands out there, there's no
question about it.
And I I listen, in terms ofpremium, there are still lots of
(09:57):
lenders out there that justpsychologically can't deal with
the notion of an independenthotel, irrespective of whether
that is the highest and best useof an asset.
They they they feel morecomfortable with a brand
attached to it.
And I'm not sure that's goingaway all that soon.
SPEAKER_02 (10:14):
Yeah.
But it seems like independenthotels are here to stay, they've
gotten stronger over time, anduh some beautiful ones out
there.
SPEAKER_01 (10:23):
So when I started in the in this business uh more
than 40 years ago, 4-0, thenotion of an independent hotel
was that that was a dyingconcept.
And for a while there it was.
However, in the past 15 years orso, plus or minus, um,
independent hotels are are aphenomenon and they they're
(10:47):
they're not going away.
And on many situations, thehighest and best use of an asset
is not to pay for brandidentity, but rather create your
own identity.
And we've seen lots ofindependent hotels that you know
you they open one up and all ofa sudden it's a new brand,
(11:07):
right?
And then it's successful, andthey take the that name and take
it around the country.
So uh independent hotels are notgoing away by any means.
Okay.
SPEAKER_02 (11:19):
So now we spoke about the tough operating
environment, some of theuncertainty out there.
This is not the first cyclewhere you've seen uncertainty
before.
Any learnings from all the othercycles that you've seen that you
want to share with the audiencetoday?
SPEAKER_01 (11:35):
Well, interesting.
You mentioned the worduncertainty.
Uh I scratch my head when I hearthat word, and we've been
hearing it often the over thepast year and a half.
And I scratch my head becausefundamentally I believe life is
uncertain.
You cross the street, you don'tknow whether you're going to
make it to the other side,right?
So um life is uncertain.
(11:56):
I think you can sort ofguarantee that in addition to
death and taxes.
So I'm not sure why it's beingtalked about so much.
I mean, we've you look back, oneof my earliest memories in life
is the Cuban Missile Crisis,right?
And and if you look at all theworldwide events that happened
then, the war in Iraq, the stockmarket crash in 1987, 9-11, uh
(12:18):
um, COVID, right?
All these calamities where whenthey occurred, it seemed like
the world was coming to an end.
And we seem to come through itevery single time, and
ultimately bigger and betterthan whatever the calamity was.
So um I'm pretty bullish, uh,you know, barring some nuclear
(12:42):
event in the world, which Godforbid were to happen.
The hotel business and thetravel industry are good sectors
to be in.
As a matter of fact, in all myyears, I don't recall ever there
being a time where hotels wereperceived as more desirable
assets than office buildings.
Right?
When you think about that, uhCOVID obviously decimated the
(13:04):
office sector, and it's stillsomewhat challenged,
particularly for anything thatis not a class A building.
Um and so hotels, you know,given that they have daily
leasing and constant repricing,uh, that's considered very
favorable, obviously in a in arising market, in a declining
market, it can really hurt youhard.
(13:25):
But that's risk and there'sreward associated with if you
buy right and you buy at theright basis.
And the last thing I'll throw inis that how to be looked at as
long-term investments.
So if you underwrite for a threeto five year hold, and by the
way, there are lots of peoplewho made lots of money doing
(13:47):
that, underwriting three tofive-year hold, it could be a
dicey proposition.
Those calamities that I justmentioned, right?
Think about COVID.
Somebody who closed on a hotelFebruary 1st of 2020 was not
feeling too good on April 1st of2020.
Same thing with 9-11, right?
On September 1st, it was verydifferent than September 12th.
(14:08):
That's that's the riskassociated with the hotel
business with daily leasingagain and constant repricing.
Uh, so if you underwrite for a10-year hold, doesn't mean
you're necessarily going to holdon for 10 years, because if a
capital event opportunity doesbubble up in year three, four,
five, where you can bake in somegains, you'll take advantage of
(14:29):
that.
However, if you areunfortunately caught up in some
calamity, you have the runway tohold on to it for 10 years total
and recover any potential damageto uh any potential calamity.
So the one thing I would suggestis underwrite for a long term.
Doesn't mean you necessarilyhave to hold on for a long term.
SPEAKER_02 (14:52):
Okay.
And, you know, they say that oneof the ways to handle the
uncertainty is to have greatdata, which you now have with
Lark and uh which you co-foundedwith Ryan Melliker, which is a
fantastic platform.
Thank you.
Having LARC in-house now, whathas that taught you about
underwriting?
Are you doing your underwritingdifferently than you were before
(15:13):
LARC?
SPEAKER_01 (15:15):
You know, we underwrite uh as a reflection of
what the market does.
That's what our assigned ourmandate is doing valuations and
market studies and feasibilitywork.
Uh LARC Lodging AnalyticsResearch and Consulting was
brought to the market uh June of2020, great timing, right after
COVID.
Um it's it it it's a phenomenaloffering that nobody else has.
(15:41):
Um there's some confusion.
There has been confusion in thepast about well, is this like
STR or is this like uh CalibriLabs or CBRE Horizons, which I
don't think exists anymore, butin any event, it's very
different.
And and um it's a one-of-a-kindoffering that has been very well
embraced by the lodging industryand it's become part of market
(16:02):
intelligence that investors arenow relying upon.
Uh, we're seeing lenders nowthat are saying, where's the
LORK report when they review anevaluation or an appraisal?
So, in answer to your questionabout changing our underwriting,
yes, we are now consideringLark's data as part of our
reflection of the market becausethe market looks at it.
(16:24):
Um listen, there's so much dataand information out there, and
the key is harvesting it andfiguring out how to use it and
manipulate it.
And LARC is a very interestingoffering in that uh Ryan
Mellicher, who runs theplatform, when you look back at
his predictions, you do a lookback, his batting average is
(16:47):
amazingly high in terms of beingwithin a reasonable range.
Whereas other prognosticators inthe space have much lower
batting batting averages.
Um we also have a GIS offeringon top of the uh the LARC uh
data.
And so it's very cutting edgeand um it's an amazing platform,
(17:09):
and I'm grateful to be a part ofit.
SPEAKER_02 (17:12):
All right, my last question for you.
Daniel, if you had a hundredmillion dollars today and you
could deploy that anywhere inthe country, any segment, what
would you do?
SPEAKER_01 (17:23):
I I like uh I I really like San Francisco.
I've said that for many, manyyears, and I I see it now coming
to fruition.
San Francisco is coming back.
I do recall when I started vovocalizing this a couple of
years back, getting a fairamount of pushback.
And uh you just look at whatBlackstone's doing.
(17:44):
Uh John Gray is a huge fan ofSan Francisco.
If you've ever seen his uh hisLinkedIn posts where he runs and
he talks about a whole varietyof things, he's when he's in San
Francisco, he talks about howbullish he is in San Francisco.
They recently acquired the fourseasons there for a fraction of
replacement costs.
And so to me, that onlyvalidates uh what I've been
(18:07):
saying for quite some time, thatthat's a great place to deploy
money.
I also like New York on along-term basis.
Uh, you look at Gencom, KareemAlibi, he's a pretty smart guy.
He's made a big bet on New Yorkover the past 18 months.
He's acquired three major hotelsin New York.
(18:28):
The most recently theRitz-Carlton Central Park South,
the Thompson on 57th Street, andthe Intercontinental on 8th
Avenue.
These are substantial assets.
And I think that speaks volumesabout um long-term prospects for
for a city like New York.
And the last thing I'll say isit's it's interesting when you
(18:48):
think about New York.
Six years ago, when COVIDhappened, New York was written
off, done, finished, nevercoming back, doom loop, if you
remember that term, right?
You walk outside this hotel, theMarriott Marquee here in Times
Square, you can't you can't evenstay on the sidewalk.
There's so many people outthere.
You can't see the sidewalk.
Right.
So I I like downtown urban coresbecause people like to live in
(19:15):
downtown urban cores.
They may not like goingphysically into an office, but
they like living in downtown,and I I don't see that going
away anytime soon.
And tourism to markets like uhuh San Francisco and and New
York on a long-term basis,phenomenal.
Yes, we're experiencing a littlebit of a uh decline and
(19:37):
hopefully a rebound given allthe geopolitical noise that's
going on in the world andCanadians not coming here, but
that's not going to continue fortoo much longer.
So I'm genuinely pretty bullish.
unknown (19:49):
Okay.
SPEAKER_02 (19:50):
That's great.
Daniel, thank you so much forjoining us.
It was a pleasure having you atour real estate symposium back
in Boston in March, in April.
Uh, and you were part of theUncensored panel, and it's a
pleasure to spend some time withyou again.
I wish you a great rest of theconference today.
Thank you so much.
Thank you again for having me.
Absolutely.
(20:10):
Great to see you.
SPEAKER_00 (20:12):
That brings this episode to a close.
Thanks for joining us on theroad at the NYU International
Hospitality Investment Forum,and our thanks to our guests for
sharing their time and insight.
The distinguished podcast isproduced by the Boston
University School of HospitalityAdministration.
If you enjoyed thisconversation, follow or
subscribe wherever you listenand share it with a colleague or
(20:35):
a student who would find itvaluable.
To learn more about our programsand the work coming out of the
school, visit bu.edu slashhospitality.
We will see you next time.
Four decades in this business have taught Dan Lesser
to be suspicious of the wordeveryone keeps using,
uncertainty.
From the Cuban missile crisis toCOVID, he has watched the
industry get written off andcome back bigger every time.
This is the distinguishedpodcast from the Boston
University School of HospitalityAdministration on the road at
(00:28):
the NYU InternationalHospitality Investment Forum in
New York City, with guest hostKashikwardharajan, director of a
real estate program.
Dan is co-founder, president,and CEO of LW Hospitality
Advisors, and one of the mostwidely quoted voices in lodging
investment.
(00:48):
In this conversation, he movesfrom the top line to the bottom
line, explains why today'sdistress looks more like a wall
of maturities than a fire sale,makes his case that the industry
simply has too many brands, andtells us why he stays so bullish
on San Francisco and New York.
Let's dive in.
SPEAKER_02 (01:10):
So we are at the NYU IHIF conference, and I'm here
with Daniel Lesser, co-founder,president, and CEO of LW
Hospitality Advisors.
Daniel, thank you for making thetime to join us.
Thank you for inviting me.
It's great to be here and greatto see you.
So, Daniel, let's dive into it.
We have a busy conference, sowe'll get you out of here
(01:32):
quickly.
So let me start by asking you uhto just give us a general
overview of what you're seeingin the hospitality industry
today from a top line and abottom line perspective.
SPEAKER_01 (01:45):
Top line is is is doing fairly well.
Uh we all are aware that uh umRevPPAR is is growing, but very,
very modestly.
And for the most part, that'sattributable to the average rate
side of the equation.
So generally speaking, grossrevenues are pretty steady-etty
(02:09):
and doing well.
Where a lot of owners andoperators are having challenges
in certain assets and certainmarkets, is bringing it down to
the bottom line.
And we've all heard a lot aboutlabor, the cost of labor, uh, in
union markets, uh uh work rules,the lack of labor is putting
(02:31):
tremendous pressure on uh thosecosts within the lodging
industry.
And then you bake in risingenergy costs, rising property
tax costs, uh rising insurancepremiums.
The industry is being challengedfrom a bottom line perspective
in terms of growing the bottomline.
(02:52):
Uh we've seen lots of assets andsubmarkets where revenues are
increasing slower than expenses.
Well, that's not a durablebusiness model.
How long can you can you dothat?
And so uh there are definitelysome challenges out there.
There's no question about it.
But challenges createopportunities, and there is an
(03:13):
enormous amount of capital outthere, both on the debt and the
equity side, looking to uhdeploy to solve a lot of these
challenges that existing ownersand operators are facing.
With maturities coming due, thecan is no longer being kicked
down the road.
And so we're seeing we're seeinglots of transactions that are
(03:34):
coming to market that are, Iwouldn't call them distressed,
but they're definitely forced.
And there's a lot of money outthere, as I said a minute ago.
And so the notion of stealingproperty in terms of pricing,
it's really very difficult tofind because anything that has a
good story to it in terms ofopportunity uh is going to
(03:57):
ultimately get bit up.
So you may have a distressedfinancial structure of a hotel,
it's operating fine, but the thecapital stack needs to be
redone.
And the the the time has comewhere lenders are no longer, you
know, playing nicely in thesandbox like they did during
(04:19):
COVID, which they should havedone back then.
And so you have this wall ofmaturities that is in fact
coming.
I know we've been hearing thisfor a while, but you just look
at the data, there's a lot of itcoming.
Uh, and there's a lot of capitalon the other side to uh take
advantage of theseopportunities.
We're seeing all sorts of tradesthat are way below replacement
cost.
I think you know I'm a big fanof San Francisco.
(04:41):
I have been for quite some timein terms of where I believe
opportunity lies.
And Blackstone recently boughtthe four Caesars there for a
fraction of replacement cost.
That's just a you know oneexample.
Um Gencom has made a huge bet inNew York City, having purchased
three hotels over the past 18months.
(05:02):
The uh Intercontinental on 8thAvenue, the Ritz-Carlton Times
uh Central Park South, and theuh Thompson Hotel on 57th.
So you have these smart,sophisticated investors, both on
again, on the debt and theequity side, uh seeing that
there's there's upside uh at acertain basis.
(05:23):
And so we're seeing repricinggoing on.
There's no question about it.
SPEAKER_02 (05:26):
Yeah, that's great.
And I think I thoroughly enjoyyour quarterly surveys that you
send out.
Thank you.
And I was looking at your Q12026 survey, and we showed that
110 hotels sold, all over$10million, 100 and a 64% jump in
dollar volume, a 30% increase inprice per room compared to the
(05:47):
same quarter in 25.
So are we at that stage wherekind of kick the can down the
road is done and you're startingto see transactions start to
happen and sellers saying, okay,let's sell.
SPEAKER_01 (05:59):
You know, it's interesting.
I uh well, first of all, thankyou for those compliments about
the quarterly survey.
Um, we've heard a lot of noiseover the past uh 18 months, if
you will, about the transactionmarket being slow.
And as I track the data on aquarterly basis, if you look
back over the past five or sixyears, and I have a chart that
(06:19):
illustrates this.
Um if you don't consider 2020and 2021, if you look at the
metrics of assets that aretrading now uh in terms of total
dollar volume, it's right wherein the range of where it was
pre-COVID.
What has changed, however, isdeal size.
(06:42):
So the volume's there, but it'sit's uh it's it tends to be
smaller transactions thanpre-COVID.
Now, with that being said,there's still on some very
substantial large assets thathave been trading uh and
refinancing.
The diplomat in in uh in inFlorida, in Hollywood.
(07:04):
Um uh uh the what's the propertyon uh the uh Park Hyde, Beaver
Creek just sold 900,000 a room.
So you know you you'redefinitely seeing some fairly uh
substantial assets um that aretrading way below replacement
cost.
SPEAKER_02 (07:23):
Yeah, and I think that's an encouraging sign.
Hopefully, other investors areseeing these big institutional
players, these big bets, andwill hopefully follow through on
other transaction activity.
SPEAKER_01 (07:36):
I I I think when we look back on this year, we're
gonna see a fairly robust marketthis year as well, no different
than we saw last year.
Okay.
SPEAKER_02 (07:44):
Uh so Daniel, you've been known for saying that our
lodging sector is crowded withundifferentiated brands.
Previously, common wisdom wasthat if you were at a branded
hotel, you got a 10 to 15%premium in terms of valuation.
Are you seeing that compresswith all of these brands in the
(08:05):
market?
And how do you how do you viewthat sentiment now?
SPEAKER_01 (08:09):
Great question.
Uh it candidly boils down toreally a specific asset and a
specific location.
The the hotel business alwayshas been a street corner
neighborhood business.
We're sitting in Manhattan rightnow, right, in the heart of
Times Square.
The Times Square hotel market isvery different than Lower
(08:30):
Manhattan in the financialdistrict.
Those are two very differentmarkets, and yet they're both in
New York.
So you really have to look on amarket by market, actually a
submarket basis and individualum individual basis.
And you know, so with so manybrands today.
(08:50):
Uh there are way too many brandsout there.
I've been saying this for years,and uh, I guess Hilton today
just formally announced the uhundergraduate.
Undergraduate, right?
They have graduateundergraduate.
Um I don't really understand uhI mean, I know why they're doing
it, and I think we all know whythey're doing it, right?
They're they're grasping forfees, right?
(09:12):
They're publicly held, they'rethey're under pressure to
produce earnings.
Um and so I've actually heard aum uh a not to be named
franchise salesperson in thehotel space articulate that uh
in answer to a question relativeto how do you decide when when
(09:33):
to come up with a new brand, andthe answer was very
straightforward.
When we run out of white spacewhen we can't plant the pin, we
come up with a new brand.
That's not economically andfinancially the way the markets
work.
And it's a little bit backwards.
In any event, there are too manybrands out there, there's no
question about it.
And I I listen, in terms ofpremium, there are still lots of
(09:57):
lenders out there that justpsychologically can't deal with
the notion of an independenthotel, irrespective of whether
that is the highest and best useof an asset.
They they they feel morecomfortable with a brand
attached to it.
And I'm not sure that's goingaway all that soon.
SPEAKER_02 (10:14):
Yeah.
But it seems like independenthotels are here to stay, they've
gotten stronger over time, anduh some beautiful ones out
there.
SPEAKER_01 (10:23):
So when I started in the in this business uh more
than 40 years ago, 4-0, thenotion of an independent hotel
was that that was a dyingconcept.
And for a while there it was.
However, in the past 15 years orso, plus or minus, um,
independent hotels are are aphenomenon and they they're
(10:47):
they're not going away.
And on many situations, thehighest and best use of an asset
is not to pay for brandidentity, but rather create your
own identity.
And we've seen lots ofindependent hotels that you know
you they open one up and all ofa sudden it's a new brand,
(11:07):
right?
And then it's successful, andthey take the that name and take
it around the country.
So uh independent hotels are notgoing away by any means.
Okay.
SPEAKER_02 (11:19):
So now we spoke about the tough operating
environment, some of theuncertainty out there.
This is not the first cyclewhere you've seen uncertainty
before.
Any learnings from all the othercycles that you've seen that you
want to share with the audiencetoday?
SPEAKER_01 (11:35):
Well, interesting.
You mentioned the worduncertainty.
Uh I scratch my head when I hearthat word, and we've been
hearing it often the over thepast year and a half.
And I scratch my head becausefundamentally I believe life is
uncertain.
You cross the street, you don'tknow whether you're going to
make it to the other side,right?
So um life is uncertain.
(11:56):
I think you can sort ofguarantee that in addition to
death and taxes.
So I'm not sure why it's beingtalked about so much.
I mean, we've you look back, oneof my earliest memories in life
is the Cuban Missile Crisis,right?
And and if you look at all theworldwide events that happened
then, the war in Iraq, the stockmarket crash in 1987, 9-11, uh
(12:18):
um, COVID, right?
All these calamities where whenthey occurred, it seemed like
the world was coming to an end.
And we seem to come through itevery single time, and
ultimately bigger and betterthan whatever the calamity was.
So um I'm pretty bullish, uh,you know, barring some nuclear
(12:42):
event in the world, which Godforbid were to happen.
The hotel business and thetravel industry are good sectors
to be in.
As a matter of fact, in all myyears, I don't recall ever there
being a time where hotels wereperceived as more desirable
assets than office buildings.
Right?
When you think about that, uhCOVID obviously decimated the
(13:04):
office sector, and it's stillsomewhat challenged,
particularly for anything thatis not a class A building.
Um and so hotels, you know,given that they have daily
leasing and constant repricing,uh, that's considered very
favorable, obviously in a in arising market, in a declining
market, it can really hurt youhard.
(13:25):
But that's risk and there'sreward associated with if you
buy right and you buy at theright basis.
And the last thing I'll throw inis that how to be looked at as
long-term investments.
So if you underwrite for a threeto five year hold, and by the
way, there are lots of peoplewho made lots of money doing
(13:47):
that, underwriting three tofive-year hold, it could be a
dicey proposition.
Those calamities that I justmentioned, right?
Think about COVID.
Somebody who closed on a hotelFebruary 1st of 2020 was not
feeling too good on April 1st of2020.
Same thing with 9-11, right?
On September 1st, it was verydifferent than September 12th.
(14:08):
That's that's the riskassociated with the hotel
business with daily leasingagain and constant repricing.
Uh, so if you underwrite for a10-year hold, doesn't mean
you're necessarily going to holdon for 10 years, because if a
capital event opportunity doesbubble up in year three, four,
five, where you can bake in somegains, you'll take advantage of
(14:29):
that.
However, if you areunfortunately caught up in some
calamity, you have the runway tohold on to it for 10 years total
and recover any potential damageto uh any potential calamity.
So the one thing I would suggestis underwrite for a long term.
Doesn't mean you necessarilyhave to hold on for a long term.
SPEAKER_02 (14:52):
Okay.
And, you know, they say that oneof the ways to handle the
uncertainty is to have greatdata, which you now have with
Lark and uh which you co-foundedwith Ryan Melliker, which is a
fantastic platform.
Thank you.
Having LARC in-house now, whathas that taught you about
underwriting?
Are you doing your underwritingdifferently than you were before
(15:13):
LARC?
SPEAKER_01 (15:15):
You know, we underwrite uh as a reflection of
what the market does.
That's what our assigned ourmandate is doing valuations and
market studies and feasibilitywork.
Uh LARC Lodging AnalyticsResearch and Consulting was
brought to the market uh June of2020, great timing, right after
COVID.
Um it's it it it's a phenomenaloffering that nobody else has.
(15:41):
Um there's some confusion.
There has been confusion in thepast about well, is this like
STR or is this like uh CalibriLabs or CBRE Horizons, which I
don't think exists anymore, butin any event, it's very
different.
And and um it's a one-of-a-kindoffering that has been very well
embraced by the lodging industryand it's become part of market
(16:02):
intelligence that investors arenow relying upon.
Uh, we're seeing lenders nowthat are saying, where's the
LORK report when they review anevaluation or an appraisal?
So, in answer to your questionabout changing our underwriting,
yes, we are now consideringLark's data as part of our
reflection of the market becausethe market looks at it.
(16:24):
Um listen, there's so much dataand information out there, and
the key is harvesting it andfiguring out how to use it and
manipulate it.
And LARC is a very interestingoffering in that uh Ryan
Mellicher, who runs theplatform, when you look back at
his predictions, you do a lookback, his batting average is
(16:47):
amazingly high in terms of beingwithin a reasonable range.
Whereas other prognosticators inthe space have much lower
batting batting averages.
Um we also have a GIS offeringon top of the uh the LARC uh
data.
And so it's very cutting edgeand um it's an amazing platform,
(17:09):
and I'm grateful to be a part ofit.
SPEAKER_02 (17:12):
All right, my last question for you.
Daniel, if you had a hundredmillion dollars today and you
could deploy that anywhere inthe country, any segment, what
would you do?
SPEAKER_01 (17:23):
I I like uh I I really like San Francisco.
I've said that for many, manyyears, and I I see it now coming
to fruition.
San Francisco is coming back.
I do recall when I started vovocalizing this a couple of
years back, getting a fairamount of pushback.
And uh you just look at whatBlackstone's doing.
(17:44):
Uh John Gray is a huge fan ofSan Francisco.
If you've ever seen his uh hisLinkedIn posts where he runs and
he talks about a whole varietyof things, he's when he's in San
Francisco, he talks about howbullish he is in San Francisco.
They recently acquired the fourseasons there for a fraction of
replacement costs.
And so to me, that onlyvalidates uh what I've been
(18:07):
saying for quite some time, thatthat's a great place to deploy
money.
I also like New York on along-term basis.
Uh, you look at Gencom, KareemAlibi, he's a pretty smart guy.
He's made a big bet on New Yorkover the past 18 months.
He's acquired three major hotelsin New York.
(18:28):
The most recently theRitz-Carlton Central Park South,
the Thompson on 57th Street, andthe Intercontinental on 8th
Avenue.
These are substantial assets.
And I think that speaks volumesabout um long-term prospects for
for a city like New York.
And the last thing I'll say isit's it's interesting when you
(18:48):
think about New York.
Six years ago, when COVIDhappened, New York was written
off, done, finished, nevercoming back, doom loop, if you
remember that term, right?
You walk outside this hotel, theMarriott Marquee here in Times
Square, you can't you can't evenstay on the sidewalk.
There's so many people outthere.
You can't see the sidewalk.
Right.
So I I like downtown urban coresbecause people like to live in
(19:15):
downtown urban cores.
They may not like goingphysically into an office, but
they like living in downtown,and I I don't see that going
away anytime soon.
And tourism to markets like uhuh San Francisco and and New
York on a long-term basis,phenomenal.
Yes, we're experiencing a littlebit of a uh decline and
(19:37):
hopefully a rebound given allthe geopolitical noise that's
going on in the world andCanadians not coming here, but
that's not going to continue fortoo much longer.
So I'm genuinely pretty bullish.
unknown (19:49):
Okay.
SPEAKER_02 (19:50):
That's great.
Daniel, thank you so much forjoining us.
It was a pleasure having you atour real estate symposium back
in Boston in March, in April.
Uh, and you were part of theUncensored panel, and it's a
pleasure to spend some time withyou again.
I wish you a great rest of theconference today.
Thank you so much.
Thank you again for having me.
Absolutely.
(20:10):
Great to see you.
SPEAKER_00 (20:12):
That brings this episode to a close.
Thanks for joining us on theroad at the NYU International
Hospitality Investment Forum,and our thanks to our guests for
sharing their time and insight.
The distinguished podcast isproduced by the Boston
University School of HospitalityAdministration.
If you enjoyed thisconversation, follow or
subscribe wherever you listenand share it with a colleague or
(20:35):
a student who would find itvaluable.
To learn more about our programsand the work coming out of the
school, visit bu.edu slashhospitality.
We will see you next time.
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