The immutable laws of lodging investment by Rich Warnick (slim version)

1. Hotels are not an appropriate asset class for a long-term hold
2. Never fall in love with real estate
3. Location is and always will be the most important criteria
4. Leave some chips on the table. No one is smart enough to know when the bottom or the top will occur
5. Do not equate luck with skill or intellect
6. Easy credit is a leading indicator that the top is approaching
7. If you can’t build a hotel so as to open in the initial stages of a growth cycle, you probably shouldn’t build it at all
8. Cap rates should be viewed as a derivative of rather than an indicator of value
9. There will always be a replacement source of irrational capital
10. Leverage over 65% loan-to-value is a high-risk strategy for hotels
11. Understand the nature of various industry participants and diligently observe their behavior
12. The degree to which pricing is rational is inversely proportional to the amount and cost of capital in the system
13. The first sign that a down market is about to turn when the majority of industry participants have joined in its funeral dirge
14. Click here for full story from Hotel Online