Article Excerpt:
TWST: What is Equity Inns today?Mr. Silver: Equity Inns currently is the third largest public hotel REIT in the country, as measured by the number of hotels in our portfolio. We own 122 hotels in 35 states. We are also the oldest public hotel REIT. We are focused on the upscale extended stay hotels such as the Homewood Suites by Hilton and the Residence Inns by Marriott, the upscale all suite hotels such as the Hyatt Place by Hyatt, and the high-end, limited service hotels such as the Hampton Inns by Hilton. We are the largest owner of Hampton Inns in the country. 95% of our portfolio is represented by Hilton, Marriot and Hyatt. Lately, what we have been very proud of is the external and internal growth we have had as a company. We have acquired 36 hotels since January 2004 at a cap rate of about 10%, which has been very accretive to our shareholders. Because of that and our internal growth that we will talk about in a minute, we have been able to give shareholders an annual average return of about 36% in 2004 and about 29% per year for the last three years.
TWST: Give us an overview of the REIT segment of the hotel industry.
What you are seeing as some of the drivers and dynamics? Are there any
stumbling blocks that you see?
Mr. Silver: What has been interesting in the last year is we are
starting to see other brands actually consolidating to be able to
compete with the Marriotts and the Hiltons of the world. You have seen
Hyatt acquire the AmeriSuites brand. You have seen Starwood and Choice
starting new limited service brands because what they want to do is to
go over to national groups and say, 'I have the resorts, I have the full
service and I have the limited service for you.' And only Marriott and
Hilton do that very well right now. And obviously, because of some of
the costs, such as those for cement and wood, going up a lot because of
the hurricanes, and labor also, even though supply is at the lowest
level it has been in 10 years, it is even going to be at a lower level.
When you are looking at the hotel industry, you are looking at two or
three more good years of rate and occupancy growth, and now maybe with
the supply down, you might be able to add another year to that,
conservatively.
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