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Originally Posted by trainiac
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If you look deeper into the numbers, it shows just how poorly Atlanta was just the year prior & the REVpar is extremely low. Atlanta hotels have taken a beating for quite a number of years now. Atlanta attracts conventions because of it's a major transportation hub, easy access to the city, plus its convention facilities. But, with the recession & many cities building new convention hotels & expansion of their existing convention centers. Atlanta has far more competition, that in my opinion they took for granted. Atlanta had to give major incentives to attract conventions which was unheard of just a few years ago.
There are many publications that track hotel occupancy & rates. Also, each publication breaks down segments of the marketplace, like downtown, suburban, airport area & such. Downtown, Midtown & Buckhead simply have an oversupply of hotel rooms. It's extremely difficult to get financing for a hotel if occupancy & rates are too low (a 1-yr. bump isn't a long-term projection or sustainable). Numerous hotel development plans were cancelled just for that reason. Atlanta isn't alone, I'm not picking on Atlanta, it's just the way it is. Which is why I mentioned my hometown of Dallas experiencing much of the same thing. Both Atlanta & Dallas have had decades of boom, now that boom has caught up to us & we're suffering from overbuilding. Niche hotels can be built, not likely any large major hotels for quite sometime, there simply isn't financing for them, at least from banks. If a deep-pocketed developer wants to take the risk by putting up their own capital, then they take the risk, not banks. Financiers aren't putting up $300+ million to construct hotels there either.
I love seeing buildings go up like anybody else, but what has to happen is viability & sustainable. What I don't want to see happen anywhere are foreclosures. Before I retired from the commercial real estate business (I worked worldwide), I tried to sell major properties in Atlanta, I couldn't even get a nibble on some without huge discounts. The marketplace was just too unpredictable. I couldn't sell the 52-story Elm Place in downtown Dallas (my hometown) for $12 million to a wealthy financier who I sold a dozen properties to over the yrs., that is how cautious investors are now. So, it's not personal against Atlanta, I just want people to look objectively & honestly about development.