by Michael Widmann and Christian Walter,
Global CEOs of PKF hotelexperts group
We are going through very demanding times for the global economy and the hotel (investment) market is being extremely impacted.
makes this situation particularly challenging for any stakeholder – be
it owners, operators, investors or lenders – is the need to take
to protect our businesses and people while simultaneously re-assessing
the mid- to long-term viability and value of our assets. Grappling with
both dimensions at the same time, on such a large scale, is unchartered
territory for an industry that has enjoyed
unprecedented growth for many years.
From working with our clients and their stakeholders over the last six weeks, we have learned the following:
- Mediation Beats Enforcement – Pragmatism and realistic reviews and revisions of terms and conditions of all agreements related to hospitality real estate are now needed to avoid expensive legal outcomes. This applies to management, franchise, lease, licensing, partnership, debt, equity and even shareholder agreements.
- We Are All In This Together – With non-performance being the biggest risk to projects and investments, all stakeholders must come together to quickly resolve issues. All parties who hold an interest in an asset, must communicate clearly and agree on a set of mutually acceptable rules, assumptions, and deliverables, to decisively move forward.
- Casualties Cannot Be Avoided But Can Be Mitigated – Preparation(s) for liquidity events (or in a better case recapitalization) of assets and portfolios are starting to happen already. Ensuring that the asset’s pricing reflects its highest and best use in the market is of utmost importance, particularly in cases where the investor holds a fiduciary duty towards third parties.
above conclusions are drawn from over 50 assignments we are currently
involved in that are directly affected by the fallout of the covid-19
On a personal note, we remain confident that we will all overcome this crisis together.