Knighthead Funding Originates $8.5 Million Loan to Complete Construction of Holiday Inn & Suites Near Savannah, GA

USA, Westlake Village, California. November 08, 2018

Knighthead Funding, LLC has funded an $8.5 million construction loan for the completion of a 104-room Holiday Inn & Suites in the Savannah submarket of Pooler, GA.

The sponsor, a Georgia-based hotel development and management company whose portfolio currently includes flags such as Hilton, Marriott and Holiday Inn had funded the entire development with all equity prior to Knighthead's involvement. Due to liquidity constraints, the Sponsor needed a creative source of capital to get comfortable in funding a project that was approximately 50% completed.

The Greenwich, CT-based lender was able to recognize the strong hotel fundamentals of the Savannah market, and underwrite and fund the loan quickly keeping construction downtime and potential losses to a minimum, according to Knighthead Vice President Brian Sullivan who led the origination team.

"Judging by the quality of construction that had been completed, and the local experience of the sponsor who had already secured a 20-year franchise agreement from IHG, we were confident the hotel would perform well against the competitive set," said Sullivan. "Based on the occupancy and the average daily rate commanded by other hotels in the submarket, we believed the sponsor could meet its projected RevPar within the first 12 months of operation."

The hotel is located in a prime I-95 corridor location that services the Savannah Airport. In addition, the hotel will benefit from numerous demand drivers including Savannah's popularity as a tourist destination and its growing economic base anchored by the military, education, healthcare and aerospace sectors, according to Sullivan.

When completed in 2019, the Pooler Holiday Inn & Suites will feature 104 guest rooms, restaurant and lounge, outdoor pool with sundeck, fitness room, business center and market pantry.


Pooler Holiday Inn & Suites
/ SLIDES
Tags: Knighthead, Knighthead Funding, Knighthead Capital, hotel, hospitality, financing, lending, CRE, real estate, loan, construction, construction lending

About Knighthead Funding

Media Contact:

Bruce Beck
President
DB&R Marketing Communications, Inc.
T: 805-777-7971
E: bruce@dbrpr.com
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Revenue Management: Focus On Profit

Revenue Management is still a relatively new profession within hotel operations and as such, it continues to evolve. One significant trend in this area is a shift away from using revenue as the foundation to generate key performance indicators (KPIs) and to instead place the emphasis on profit. Traditionally, revenue managers have relied on total revenue per available room (TrevPAR) and revenue per available room (RevPAR) as the basis of their KPIs. Now, some revenue managers are using gross operating profit per available room (GOPPAR) as their primary KPI. This puts profit at the center of revenue management strategy, and managers are increasingly searching for new ways to increase the profitability of their hotels. Return on Investment is the objective of any hotel investment, so it is only logical that profitability and ROI will be emphasized going forward. Another trend is an expanded focus on direct hotel bookings. Revenue managers know that one way to increase profitability is to steer guests away from online travel agencies (OTAs) and book directly with the hotel. This tactic also reinforces brand identity and loyalty, and encourages repeat business. In addition, it provides a valuable platform to market the hotel directly to the customer, and to upsell room upgrades or other services to them. Another trend for revenue managers involves automation in their software programs. Revenue management systems with automation are far more desirable than those without it. Automating data entry and logistics increases efficiency, allowing managers to spend more time on formulating strategy. As a bonus, an automated system helps with aggregating and interpreting data. The October issue of the Hotel Business Review will address these developments and document how some leading hotels are executing their revenue management strategies.