Sample – The number of hotels and rooms from which data is received.
Securitization – The process through which an issuer creates a financial instrument by combining other financial assets and then marketing different tiers of the repackaged instruments to investors. The process can encompass any type of financial asset and promotes liquidity in the marketplace.
Mortgage-backed securities are a perfect example of securitization. By combining mortgages into one large pool, the issuer can divide the large pool into smaller pieces based on each individual mortgage’s inherent risk of default and then sell those smaller pieces to investors.
The process creates liquidity by enabling smaller investors to purchase shares in a larger asset pool. Using the mortgage-backed security example, individual retail investors are able to purchase portions of a mortgage as a type of bond. Without the securitization of mortgages, retail investors may not be able to afford to buy into a large pool of mortgages.
Segmentation – Rooms sold and revenue data broken down by source of business (transient, group, contract) and source of revenue (room, F&B, other).
Serviced Apartments – A type of extended-stay accommodation that typically includes a suite with a full kitchen. Unlike extended-stay hotels, many serviced-apartment properties don’t have amenities such as 24-hour front desks, free breakfasts, manager’s cocktail hour, etc. Serviced apartments are more common in Europe and Asia than in North America.
Sharing Economy – Also known as the peer-to-peer economy, this is an Internet-based economic system in which consumers share their resources, typically with people they don’t know, and typically in exchange for money. In the hotel industry, sharing economy websites such as Airbnb, HomeAway, VRBO, FlipKey and others allow residents of homes, apartments and condos (called hosts) to rent their accommodations on a short-term basis to visitors.
Size – Based on physical guestroom count of the hotel.
SMERF – An acronym for the social, military, educational, religious and fraternal segment of the group travel market.
Soft Brands – Individualized hotels that give owners and operators the opportunity to affiliate with a major chain distribution while retaining their unique design, name and orientation.
Special Servicer – Companies that have specialized processes in place to deal with loans that require unusual attention, i.e., currently in or about to go into default. Special servicers can obtain the loans or just the servicing rights to loans. Often, the Pooling and Servicing Agreement between the investment pool trustee and the master servicer will define the conditions under which the servicing of a loan or pool of loans will be transferred.
Stalking-Horse Bid – An initial bid on a bankrupt company’s assets from an interested buyer selected by the bankrupt company. From a pool of bidders, the bankrupt company chooses the stalking horse to make the first bid.
Stay-Pattern Management – A revenue management process that seeks to make optimum use of the hotel’s inventory capacity. This is done by studying the stay patterns over a period of time and offering rate differentials, minimum and maximum length of stay, etc.
Submarket – A geographic area which is a subset of a market. A market is made up of one or more submarkets.
Submarket Class – This designation is similar to market class with the following exceptions: The luxury and upper-upscale classes are collapsed to form a single class. The upscale and midscale-with-F&B classes are collapsed to form a single class. The midscale-without-F&B and economy classes are collapsed to form a single class.
Subordinate – refers to the fact that one entity’s position is inferior to another; for example, the mezzanine lender is subordinate to the primary lender, meaning that the primary lender is paid first and the mezz lender is paid next; thus, the mezz lender is in a riskier position if there is not enough NOI to pay them; the investor is paid last, and is in the riskiest position if NOI declines.
Syndicated Loan – A loan offered by a group of lenders who work together to provide funds for a single borrower. The borrower could be a corporation, a large project or a government. The loan may involve fixed amounts, a credit line, or a combination of the two. Interest rates can be fixed for the term of the loan or floating based on a benchmark rate such as the London Interbank Offered Rate.
Typically there’s a lead bank or underwriter of the loan, known as the arranger, agent or lead lender that may be putting up a proportionally bigger share of the loan or perform duties like dispersing cash flows amongst the other syndicate members and administrative tasks.
Also known as a syndicated bank facility. The main goal of syndicated lending is to spread the risk of a borrower default across multiple lenders (such as banks) or institutional investors like pensions funds and hedge funds. Because syndicated loans tend to be much larger than standard bank loans, the risk of even one borrower defaulting could cripple a single lender. Syndicated loans are also used in the leveraged buyout community to fund large corporate takeovers with primarily debt funding.
Syndicated loans can be made on a best effort basis, which means that if enough investors can’t be found, the amount the borrower receives will be lower than originally anticipated. These loans can also be split into dual tranches for banks (who fund standard revolvers or lines of credit) and institutional investors (who fund fixed-rate term loans).