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By Ryota Dei

HAGATNA, Guam (Pacific Daily News, May 24) – With the sale of several big-name hotels in Tumon in the past few years, real estate transactions in the hotel industry show no sign of slowing down.

Several hotels are either still soliciting offers or negotiating deals.

The Hotel Santa Fe, Imperial Suites Hotel, the former New Century Hotel, and the Inn On The Bay are reportedly for sale while the Pacific Islands Club and Guam Marriott Resort have been in the negotiation stage.

Several investors are competing to purchase the Hotel Santa Fe in Tamuning, which has a price tag of about $5 million, according to Nick Captain, president of real estate consulting firm The Captain Company and Captain Realty Advisors, which represents the Sante Fe.

The hotel, with its pink exterior, was acquired by GL Commercial Real Estate 1 LLC in 2003 after foreclosure and lifting of bankruptcy protection of the hotel property. Santa Fe Corp. previously managed the hotel, but filed for bankruptcy in 2001.Considering its $12 million construction cost and $1 million renovation cost, Captain said the $5 million sales price is a fair price. He added, however, that the seller is testing the waters and willing to negotiate it with prospect buyers.

Prospective buyers, Captain said, consist of both on- and off-island businesses, including two Hawaii-based investors and some from Korea.

The hotel industry on the island has experienced a shift from a predominant presence of Japanese owners to the mixture of diverse owners in recent years.

Captain said the demography of hotel owners does not make a substantial difference, as long as they are well-capitalized and willing to renovate and reposition the property to stay competitive.

Captain said it is better for hotel owners to form a management contract with renowned international hotel brands because brands such as the Four Seasons or Shangri La, will implant more confidence for other businesses to invest in the island.

"It's certainly attractive when hotel owners are able to land new international management companies. For example, when Marriot came to Guam, that was certainly a real advantage to Guam," he said. "It makes Guam even more attractive to foreign investors because it provides more reputation as a destination."

Captain said there are a number of cases in which hotel owners have had to swallow the financial pain of selling their properties at a price below the fair-market value.

"The hotel operating business is not very attractive because the net income that it generates, after paying all your expenses, is still relatively low because room rates are down and occupancy rates are not as high as it needs to be for hotels to raise profits," Captain said. "That's why hotel prices have fallen so much on Guam."

Captain said the real estate market has bottomed out.

"There is no downside potential left in the hotel pricing," he said. "So clearly we need higher occupancy and room rates, which drives values higher for hotel assets."

May 24, 2005

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