At one time FCH offered $22 worth a share. IS this still warranted?
Its difficult to assess the correct NAV on these companies. One way to appraise value is using an income approach on the properties which would not make any of these trusts look good. This is short term however. I remember appraisals of HMT and HOST a couple of years back that depicted them selling at about 1/3 of their value.
Replacement cost is perhaps the best measure to use now if you have a long term perspective.
Does anyone have any ideas what the value of these companies would be using that measure?
All excellent points.
We also have to keep in mind that travel was also impacted by the Gulf War for several months. So having a terrorist attack on our shores impacting traveler psychie should result in "more than several months" of reduced travel.
I am an optimist and have always repeat the words that Paul Wettsell (CEO MHX) says at conference calls when things get slow. Basically he says that "businesses have to get their people out there to make sales".
He is right. It will come back but it will take quite sometime. Some of the businesses I have talked to are holding back on travel til next year because of employees who fear traveling right now. People want to stay closer to their families right now. Next year will be a new year and the absence of any terrorist action should give some comfort to those weary road warriors that know they have to get back on the road again at some point.
This travel delay and burden has to be dealt with. They have to find a way to speed people through airports. My fear is that the next shoe to drop is leisure travelers finally come back and have a very bad travel experience and stay away or find alternative closer to home travel.
We will only give up our freedoms for so long. Our freedom of movement cannot be hindered to this great degree in the name of safety especially when any suicide bomber can board a plane with a bomb in luggage going into the plane that is not scanned. So what good is all this hand checking of carryons?
Without dividend there is no current yield. Any further price increase is pure speculation on what the economy and travel/lodging sector might do in the future. I don't like to play that game. Until numbers begin to backfill behind the price run-up I think there is a higher risk of price decrease (not fall off the table price drop, but more slight decline to flat). I doubt your crystal ball is better than mine. Someone please post RevPAR trend that supports continued increasing price trend. Thanksgiving was extremely poor. Vacation season will not kick in until about February, so look for 4th qtr to be pretty bad year over year comps. Hard to attract buyers based on yield when there will be none for at least 9 months. I'm open minded, show me the trend numbers to support price run up and I'm right back riding the wave back to $20.
CEO Wettsell put it best in his cc. Businesses have to get their people out there traveling to generate new business. Having worked for many clients over the years with sales and marketing forces they do not put them up in the local ltd svc hotel. These valued employees want and demand full service hotels to meet their needs. They will pay the price again when the BUSINESS risk of travel is only exceeded by the reward of the travel event itself. It has always been that way. It will always be that way.
Yes some suggest that once again conference calling and internet events can replace travel but in the end humans want and need interraction face to face. Some travel can be replaced by such technologies but by in large the old order will prevail again.
Keep in mind that MHX was being played big by the risk arbs that are only around for the deal. When it appeared the deal w/FCH would collapse they bailed big time. That was the first major blow to MHX. The second was clearly that MHX has more resort destination hotels in FL, DC than FCH and the qtrly report showed that MHX did not fair as well between 9/12 and 9/30 as FCH.
Overdone, yes. ENN and WXH are holding up better because their hotels are primarily driving destination hotels.
I see a case for MHX at $24 if all the events I expect to unfold relating to the closing of the supply demand room gap that is a result of a lack of new construction in many of MHX's locations. By mid 02 assuming this economy is turning we should start seeing evidence and analyst reports further confirming the present view that revpar could or should grow at a 6% clip for 03. That should result in full dividend restoration.
With interest rates this low keeping in mind the drop since 9/11 and the expectation that they will stay low for quite sometime it will be difficult for investors to resist these juicy yields assuming no further terrorist threats.
I get the impression that what's going on is that there are certain people that have to travel for business that will stay no matter what the price is and there are certain people that will take vacations regardless as well (they are usually people that travel for business anyway). Then there are people who are not going to travel regardless of the price. Right now the hotels are finding that travelers are not responding to the lower prices as the real fear is not the cost of the hotel, but not getting on an airplane. In addition to that, throw some job uncertainty and people are cutting back. Personally, I like the reduced prices as I'm going to travel anyways. Only reason I sold, was because it appears that price is getting ahead of the fundamentals. I won't mind buying back in at $16 if the value based on fundamentals is $22, but whats the fundamental value of holding a REIT that is posting losses??? Guess it depends on how big and which direction they are going. Does anyone know???
I have a Pru Bache report on FCH showing there will be no need for any dividend payment in q4 based upon how year end revpar is winding up. Remember that occupancy is not the issue right now. Occupancy is fairly good; its the discounting that requires giving up revpar (revenue per room) that is killing us in terms of the variable portion of the rent which is where a lot of our dividend income comes from. Pru made what I believe to be a good analysis and from that if I recall they also referred to MHX since the two are like brothers in terms of hotel type and impact of 9/11 although MHX has more resort destination hotels than FCH which is one of the factors keeping MHX's value down near term.
MMH. Saw a report by one of the analyst firms with a $2 price target. If you go onto the MMH board you have a solid group of believers in that stock for the long term. I have no interest in ops side but if I did I would go with the industry leaders like MAR, 4 Seasons, HLT, HOT for the longer term.
I hope you are right about FCH and MHX pricing in but if ENN's morning trading is any measure it appears investors were selling out on the news that ENN would eliminate the q4 dividend.
I was just as surprised at ENN's announcement only because I figured if WXH could pay a q4 dividend ENN would be able to pay one too. WXH and ENN are sort of peers and have been impacted similarly in good and bad times.
The Pru Bache report dated 11/2 is titled "FCH: Although it Deferred the 4q01 dividend decision: we see no reason why Felcor is more likely to pay one than its competition"
Aint that a long-winded title. Yes a few weeks have gone by and occupancy has gotten much better but revpar is still very weak.
FCH is very focused on the value of its currency and if they saw light at the end of a tunnel they might try to pay a dividend even if unnecessary to retain stock value. I think all the signals sent by FCH post 9/11 is that they would like to be an industry consolidator.
So, all we can do is wait. Hey, I won't feel bad if it turns out I'm wrong and a dividend is paid. I am more interested in whether FCH will attempt to establish an 02 dividend level at this time or defer until 3/02 when the hope is that there is greater visability.
Show me the facts that there will be no dividen? As far as I know there still may be a small q4 dividen I think the market has already priced the no dividen senario in and I believe its overdone.
Whats your view on mmh, I just bought some as a speculation play?
Your best chance at a dip may be when MHX reports no q4 dividend. Same for FCH. If ENN is any guide (at least morning trading in ENN) many investors are hanging in believing in a q4 dividend only to bail when the formal announcmt is made. I must confess surprise at this inasmuch as it has been fully broadcast that there will be no q4 dividends almost across the board in lodging reits.
mhxfan, you were right. I got spooked by ENE into taking profits on some things just in case. Looks like I left some money on the table here, but making it in all kinds of other places helps out. If any of you got in CMM its up about 50% in the last month. Still undervalued, but do your homework. Its a complex situation. Best of luck to all MHX'ers. I'll be watching for a dip to get back in.