Commercial Real Estate Industry

www.reit.com Laurence Geller, president and CEO of Strategic Hotels and Resorts Inc. (NYSE BEE), spoke with REIT.com during REITWeek 2011: NAREIT’s Investor Forum about loyalty in the hotel sector and the company’s decision to not focus solely on acquisitions. Geller said loyalty in the hotel sector is key to being successful, and he intends to focus on further increasing the profitability of the company’s current assets. He pointed out that the cost of “acquiring” a new guest can run as high as 14 percent. “Clearly, if you can keep loyalty with your guests you don’t have to seek new acquisitions and can save a lot of money,” Geller said. He also added that while he thinks there will be increased acquisition activity in the lodging industry, Strategic Hotels has a very distinct niche and “we don’t want to waste it and overburden our balance sheet in any way by going for an asset that we don’t have a unique edge for.” “What we look for is opportunism that keeps us leverage neutral or we’ll look for something that we have a synergetic benefit in doing, but just to chase acquisitions is not necessary,” Geller said. The company also has focused on reorganizing management positions and upgrading their properties, which has allowed them to outperform their competition, according to Geller. “As the market has gone down, we outperformed our competition,” Geller said. “We had newer hotels, we lost less rooms and we were increasing our market share penetration against our …

www.reit.com As the economy continues its sputtering recovery, commercial property owners have to arm themselves with information to help retain tenants, according to Boyd Zoccola, chair of BOMA (Building Owners and Managers Association) International and executive vice president of Hokanson Companies Inc. In an interview at the 2011 BOMA International Convention and The Every Building Show at the Gaylord National Resort and Convention Center in Washington, DC, Zoccola discussed the greatest challenges facing landlords in both acquiring and retaining tenants. He stressed that property owners have to prepare themselves for a highly competitive marketplace, noting that acquiring new tenants will be difficult. “Make sure that you’re ready with your best game when you’re going out to acquire those tenants, because that’s what is going to separate you in this competitive marketplace,” Zoccola said. That includes evaluating operating expenses. While factors such as property taxes are beyond the control of property owners, Zoccola pointed out that owners can affect how their buildings are operated. Consequently, they need to be taking steps to benchmark their operating expenses, such as energy costs, against industry competitors. “Operating expenses are every bit as important today as rental rates are,” Zoccola said. “The tenants want to know what you’re doing and how you compare to the rest of the industry.” Similarly, Zoccola said leasing agents need information about any …
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