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In summary, while there may be some potential for extraordinary profits from investing in hotels, we believe that the ability to simply buy low and sell high as a result of lodging market cycles or capital market cycles will be greatly diminished in the future. Opportunities to take advantage of noise traders (that is, those whose motivations are based on factors other than the economics of the deal) are gone, and there is no evidence of distressed selling in the current environment, even though the challenges to the industry have been great. Disciplined equity and debt capital, smart underwriting, and broad capital markets will continue to weaken the ability for noise trading to exist in the market for hotels as investment property. Paraphrasing John Houseman’s words in the old Smith Barney advertisement, in today’s lodging market, you have to make money the old fashioned way, you have to earn it.


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