As the Pendulum Swings

Hotel and resort developers are watching the mortgage industry with a glint in their eye. The good news is that glint appears to be powered by $ signs. Development of new properties depends on alignment of a number of factors. Chief among those factors are market and money. Is your resume ready for the coming shift?
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The shortfall of inventory, particularly in meeting-event space square footage, is becoming restrictive. There is a lot to be said for competition and it’s really true that when the water rises, all ships float. But where will new properties come from to meet the growing need? Over the past few years the mortgage industry has championed developers focused on rehabilitation of existing properties with greatly reduced down payment requirements, while the typical new build required 40% down. As a result, new facilities have been built only in markets proven to be a “sure thing” with deep equity pockets.

The Wall Street Journal reports a shrinking call for new mortgage money. That has lenders and private insurers looking for new products and approving more loans with lower down payments. (Andriotis, 2014) As further evidence the pendulum is swinging, consider Ivar Yuste’s recent Hotels post about the upswing of resort development. (Yuste, 2014) Yuste, partner of PHG Hotels and Resorts in Madrid, cites the surge in feasibility study requests for leisure destinations and the fact that construction-cost levels are making sense again. These are indeed the first steps of development and indicate that the appetite for risk is returning.

The energy created by alignment of market and money will surely swing the pendulum. Get ready for a while ride! Is your resume ready?

Works Cited

Andriotis, N. T. (2014, April 19-20). Lenders Ease Mortgage Rules, Chasing New Business. The Wall Street Journal, pp. A1-A2.

Yuste, I. (2014, April 16). New resort activity on the horizon. Retrieved from Hotels: The Magazine of the Worldwide Hotel Industry: http://www.hotelsmag.com/Industry/Blogs/Details/49473