“What do we say to the God of the Hotel Business Cycle?”
If you’re a Game of Thrones fan, you’re familiar with the question, “What do we say to the God of Death?” For the uninitiated, the response is, “Not today.” I am confident that an estate planning attorney would have a more thorough response.
For the hotel and lodging industry, signals of a potential global recession invoke a similar question: How should we address the prospect of a downturn in the business cycle of this industry? The proper response is not to ignore it. For well-capitalized developers, a downturn may bring opportunities to invest in new properties at discounted rates. For nearly everyone else, it will bring challenges that we should be ready to confront.
This April, I and my former colleague Matthew Gensburg were privileged to address the Spring Meeting of the Academy of Hospitality Industry Attorneys on the subject of workouts and restructurings in the hotel industry. (Matt and I used to practice together. We worked on several restructurings and bankruptcies during the early 2000s recession before I joined the hotel and lodging industry.) We made our presentation this April from the perspective of the owner of a financially distressed hotel and called it, “Anatomy of a Hotel Workout.” I began with a discussion of relief that a financially distressed hotel owner may seek from its various creditors to avoid bankruptcy. Matt then discussed selected issues that a hotel-debtor will confront if it needs reorganize under Chapter 11 of the Bankruptcy Code. Here is a copy of our PowerPoint from the presentation.
If you have any questions regarding a hotel in financial distress, please contact me at firstname.lastname@example.org or (202) 223-8901.