All posts by Keith Thompson

Being right or being hired

Career

In our business, we can be absolutely correct in our evaluations and never earn a dime because we never get hired. See, you must get hired to have the chance to earn money. You could be the smartest real estate broker to ever lace up a pair of wingtips, but if you don’t understand what the seller is really looking for, you will never get hired.

I had this conversation yesterday with a guy. I ask him, “if he was working for a company and it was his job to hire the broker, what is his number one objective?” There are many answers that come to mind, but in the end, his number one objective is to keep his job. He keeps his job by making safe decisions.

So, let’s say this same employee has three equally qualified firms that have made proposals, which one will he hire? The one who had the best analysis or the one who gave him the highest value? Answer, ding, ding , ding – is the one with the highest value.

Now, to retain credibility in this process we always give a range (from conservative to aggressive) along with an asking price that is higher than both. I figure if we miss on all three valuations, we shouldn’t get hired anyway and get sent to our room without dinner. Ha

So, in hotel sales like much of life, the real insight comes when we understand what the other person really wants. If you can understand that, be ok with that, you will go far in life and in business. So, in our company I tell my brokers, you can be right, or you can be hired. I believe if you really think it through, you can get both. KT

Me first living with leftover giving

Life

I wish I could think of these catchy phases, but I can’t. I was listening to Andy Stanley yesterday and he used this phrase, “me first living and leftover giving.”

My mentor in life (Harmon Born) told me years ago his view of personal financial advice. He said when you earn money, give 10%, save 10% and live off the 80%. That is incredibly simply yet it could be the best thing you could ever do. See, the giving part keeps your heart humble, the saving part strengthens your hope for the future and living on the rest, helps keep your spending in check.

What Andy Stanley was saying was that so many people use it all on themselves and if there is any leftover, sometimes they give. People that live this way very rarely have any leftover and more times than not, they live from paycheck to paycheck.

There is something very deep spiritually when a person chooses to have a giving heart. I can’t explain it in the vernacular, but you already know what I mean. Additionally, there is something about having money saved that helps you sleep better and have more rest and peace. The person that spends everything they make just seems to be in a constant state of unrest.

So, don’t be a “me first living and leftover giving” person. Instead be a “me first giving and leftover living.” KT

Influence – know when it’s time to change

Career, Life

I am not there yet, but I can only imagine that one of the most difficult steps in a person’s life is when they choose to retire. I personally don’t believe it should be based on years worked or your age. I think it should be based on influence. Take Bill Marriott for example. He is 89 years old and still carries enormous influence at the company his family started. Look at Bill Gates. He is 65 and could you imagine someone asking him to retire just because of his age?

I met a guy one time named Bob and he was in his mid-70’s. He still referred to himself by his nickname of “Big Deal Bob.” Well you can already imagine what I was thinking. Bob should have retired many years before but still believed himself to be in the game and influential. The truth was Bob was neither. It hurt my heart a little seeing him still trying to be what he used to be instead of what he was now.

I believe it is far better to hang up your cleats when you still have some influence left, instead of waiting until it is gone. Again, while I am not there, I just believe people respect the person who chooses the right season of life to roll down the door and look for the next thing in life.

A very smart lady (my oldest daughter) told me one time that the key to making that shift in life is to already be involved in the next phase. Basically, don’t wait until you end one thing to start the next. Pretty smart advice. KT

Jingle mail

Career

In the hotel debt world, there is a new post-COVID term. It is called jingle mail. It means when a hotel owner has a non-recourse loan and they stop trying to fight the pandemic and mail the keys back to the lender/bank and walk away. When the lender picks up the envelope, it jingles because there are keys inside it. That is happening all over the US with hotel loans because of the devastation COVID has caused to the hotel and travel industry

This is happening not just on hotels, but also on other commercial real estate segments like office and retail etc. Non-recourse commercial loans became a mainstream lending option probably 25+ years ago. The great news for borrowers is it is non-recourse but the bad news for lenders, is that the borrower can just walk away from the debt and there is little the lender can do about it.

In a year like 2020 and probably most of 2021, many borrowers, don’t want to fund the loses and just decide to walk away instead.  So, among the many new buzz words created due to COVID, one of the newest is, jingle mail. If you are a lender, the last thing you want to do is pick up an envelope with a bulge in it that jingles. KT

Things we didn’t see coming

Career

The past year has been great for a few hotel segments and very difficult for many others. I have personally been through many cycles and this past year has been like no other. A shift has occurred that many people didn’t see coming and most certainly, I didn’t see coming. Given this, I thought I would list a few changes that have come out of the past year.

Old exterior corridor hotels are back in vogue. By their original construction design, they have built in social distancing.

The great relocation. Mass exodus from urban core centers.

Most all demand generators from 2019 have changed significantly and many have gone away.

Density has been replaced by distancing.

The best yield/return hotel segment – hard budget and deep economy.

Rural retail – making a strong come back -Example Dollar General’s EBITDA almost tripled in 2020.

Conventions, conferences, sports, and entertainment – attendance almost nonexistent.

Top 10 US markets (except Miami) have experienced possible long-term effects due to corporate travel not wanting to be in dense crowds.

Airbnb – valued at or about the combined value of Marriott, Hilton, Hyatt and IHG

Tesla – valued 4 x the combined value of Ford, GM, and Chrysler.

Suburban and small market housing – demand is greater than supply.

Zoom has replaced face to face.

The habits of the corporate traveler may have changed long term.

Beach hotels are the most sought-after investment segments.

Broadway has taken a bow out.

Multifamily and industrial are the highest demand commercial investments.

Long overlooked suburban and tertiary hotels have held value greater than their urban counterparts.

The darlings of hotel investment world one year ago, are now the worst.

For me the point is, everything can change and the seemingly invulnerable can become the vulnerable. Whatever the market or whatever the business, the past year has taught us to never be stagnant in our thinking because things outside our control can change overnight. KT