While plenty of other commercial real estate brokerages are starting their own distressed-asset divisions, Davis says they tend to be generalists while HREC deals specifically with buyers and sellers specifically interested in hospitality paper. The firm was founded in 1994 and has eight offices across the country.

"A lot of what we do in that arena is not broad-based marketing, but more targeted," Davis says. For example, HREC would target 10 to 15 prospective buyers for a hotel note brought to it by a lender, he says.

Industry peers that have expanded services in response to the declining market include the Tampa-based Plasencia Group, which has received a rush of requests by clients for guidance in dealing with distressed hospitality assets. The company assists lenders and financial institutions in working through highly complex aspects of hotel operations.

"Hotels need to be treated as operating businesses, rather than pure real estate," says Lou Plasencia, the firm's chairman and CEO. "People tend to forget that hotel rent rolls are typically one night in length."

Plasencia also notes that economic constraints have impaired hotel values by as much as 30% in many cases. "Both borrowers and lenders need to realize that this could mean there is no longer any equity in a particular asset," he says.

Davis says the overheated market for hotels caused the sector's operating performance to decline at such a traumatic level that has forced many seemingly healthy assets into distress. He points to HREC's experience with debtor-in-possession sales, workouts and value preservation as giving it an advantage over other hotel consultants, adding that its principals have handled 65 REO hotel sales.

"We've seen some mistakes made by people buying notes based solely on yield parameters without really understanding how that particular asset is operated," Davis says. "It all comes down to the underlying fundamentals of what is a unique operating business, as opposed to other forms of commercial real estate."