ATLANTA-Hotel Equities and Premier Hotel Corp. inked an agreement to joint venture the management of seven hotels. Hotel Equities is taking over the management of the string of hotels Premier owns, including properties in North Carolina, Georgia and Florida. Premier Hotel will refer management contract candidates to Hotel Equities and serve as a non-exclusive development partner with Hotel Equities.
“Our JV partner wants to focus more on development,” Hotel Equities President Fred Cerrone tells GlobeSt.com. “It made good sense for us to help on the management side and let them focus on the development side. It’s a one plus one equals three approach to business.”
Now may be the time to develop new properties. According to Rubicon, the total committed occupancy for U.S. hotels in 2011 is up 6% and group pace is up a strong 30.8% over the comparable period last year.
“Despite the slowly recovering U.S. economy, the demand outlook for the hotel industry remains positive,” says Tim Hart, president and CEO of Rubicon. “We expect this positive growth to continue as we progress further into 2011.”
As Cerrone sees it, if you look at the hotel development cycle like a clock—with noon being the best time to own a hotel and 6 p.m. the worst time, the market is on the positive side of that clock. Now, he says, is the time to focus on hotel development again. Developers who break ground tomorrow would deliver new product by mid-2012.
“We are bullish on future growth and development of hotels in the Southeast,” Cerrone says. “We are going to be looking at some urban areas. A lot of future development in the hotel business will occur in a mixed-use setting with higher densities and combine a hotel and some retail space, office space, or some cases condominiums.”
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