The volume of U.S. hotel sales that occurred through midyear 2006 have already surpassed total transactions for the year 2005, a record for the industry. These days an active market typically means a lot of change—renovation, repositioning, redevelopment, brand/operator conversions— all strategic moves aimed at ultimately enhancing asset value.

While significant resources are devoted to planning an asset’s future success, there is aninterim period that all owners must endure—the dreaded transition phase.

With so much time and effort focused on posturing for the future, the transition period oftentimes can leave hotels in a state of “operating paralysis.” While everyone has their eyes on the prize following a successful transition, a wide variety of challenges are faced and must be overcome: a new operator but not yet branded, the sales team is selling a product that has not yet been delivered, a new management team, new systems, staffing and training, business retention, not to mention the cost of the transition—these are just a few of the issues that can impact this period.

Active owners realize that a “grin and bear it” mentality increases risk exposure and potentially could impact operating cash flow during this period even beyond assumed business interruption due to renovation, which can be anywhere from three to six-plus months. The following should be considered when embarking on a major hotel change to ensure success is achieved both during and post-transition.

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