With unprecedented change impacting the hospitality sector, IMN hosted a webcast dedicated to distressed hotels on July 1, 2020. Attendees were able to learn how hotel executives are working to rebuild their industry, protect their portfolios, and generate value as the hospitality sector braces for a rebound in receivership.
For Bruce Kinseth, keys to a successful Receivership Assignment starts up-front with preparation and communication. "You have to be ready, you have to do your homework, you have to be prepared with the team to take over an asset ... that is the absolute key," Bruce stated. "We believe the communication and understanding the objectives of the lender, building the relationship with employees and the outgoing management organization are all keys to being successful."
The hotel Brand is also necessary for the Receivership Assignment. "From day one, you need to be talking to the brand about where the asset is fitting in their scheme and how that can affect your long-term owner and lender when they take the hotel back so that will it be able to be re-licensed when they sell it. A lot of considerations there," said Bruce.
A brand PIP may also be necessary for the hotel which is necessary to communicate to the lender to get timelines down. Bruce explains, "Some lenders at a hotel are interested in spending money and some are not, depending on what their circumstances are. So you have to be able to negotiate with them and with the brand to help them navigate through it."
Lastly, the Human Resources aspect is a major component in the assignment of the receivership as employees want to know what's happening with their new benefits if they'll lose PTO, as well as possible changes in health benefits. "Part of a good receivership assignment is relating and getting in with the team that takes over the property, meets with the employees, get their buy-in to the management group and the new management team so that they feel good about where they are at.
"You have to be able to build the team because the success for the lender that takes back the hotel is you got to have revenue and you have to protect the revenue streams, but you also have to protect the customer service that delivers good revenue streams and that’s what you need the employees for."