Morris Lasky, chairman of LOG, is widely known as the “Hotel Doctor” for his apbility to come into a property and diagnose problems and turn hotel assets around quickly. “I go in and do a three-day streamline study for a lot of people, so LOG has the skill to go look at a property and, in very fast order, identify: Is there a potential for future?; What does it cost?; and Is it branded propertly?” Lasky explains. “All the basics, so that if Marty said to me, ‘Morris, what do you think of the XYZ hotel in Podunk?’ I would have an answer for him in three-to-four days. We approach it as: If I owned it myself and it was my money, what would I do?”

He notes that just as importantly, it is good to know whether a property is even worth owning, let alone turning around. “There are properties out there that don’t have a future from that perspective and are not going to make it one way or another. We’ll walk past those quickly, but knowing what we know, without even going to the site we can figure out if a property is something we want to spend time on as an acquisition.”

The CMBS market has caused a lot of problems obtaining operating information on assets from lenders or special servicers; however, Lasky and Schiffman were not overly concerned with the daunting task. “We’ve operated 200-300 hotels and I can’t tell you how many times you walk in and there’s nothing,” Lasky says. “So your reconstruct the best way you can. You do Smith Travel competitive surveys, there’s a lot of ways to get that information, including local townships where tax information has been filed and that info is available. It’s almost like a forensics type thing.”

“The seller has to incur a longer period of due diligence to do the kind of reconstruction of the operating framework of the hotel,” Schiffman explains. “It’s not rocket science so long as you can get the asset to sit still for a while so you can bring your management people in and make a determination on how this things going to operate, which the end result you’re going to do anyway, regardless of whether the historical information is going to be there.”

Lasky notes, “One of the things that we found is a lot of lending institutions don’t track these properties, although they have the capability within their documents and the first time they find out there’s a problem is when they don’t get mortgage payments for three months. And they say, we’ve got a problem.”