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October 23, 2020

Tisch Center Course Spotlight: Investment Analysis and Financing

Investment Analysis and Financing is an concentration course in the BS in Hotel and Tourism Management program. Assistant Professor Sean Hennessey, the instructor, tells us more about his background and the course in this post.

What is your background?

My hospitality experience started as a teenager, washing dishes. While earning degrees in Culinary Arts and Hotel Administration, I continued to work in operations with companies such as Marriott and Disney. Following university, I became one of the first employees at HVS, then a young firm but now a global leader. This role helped launch my career in earnest and I rose through the ranks at several firms, ultimately become the hospitality consulting practice leader in the New York office of PwC. Then in 2004, I founded Lodging Advisors, a boutique hotel consulting firm.

Working on both new developments and existing hotels has been an exhilarating experience and provided and excellent understanding of the skills students need to enter this field. Because the stakes are so high—with investors often committing hundreds of millions of dollars, in part based on your advice—there is a high degree of knowledge, judgment, precision, and professionalism demanded of employees. Making students aware of the opportunities and preparing them for the requirements of this field is challenging but rewarding.

I joined the Tisch Center’s full-time faculty in 2014 but taught as an adjunct for many years. At NYU, I’ve taught credit and non-credit courses at both the Tisch Center and the Shack Institute for Real Estate. I’ve also taught for several years in the Cornell Hotel School’s executive education program, and have guest lectured at Michigan State, Columbia, Yale, and several other schools.

At the Tisch Center, you teach the Investment Analysis and Financing course. What are the objectives of the course?

Though this class requires a great deal of work, the objective is quite simple: to prepare our students with the skills necessary to enter the investment side of the hotel business. While everyone knows that there are many large hotel companies, many students are surprised to learn that there is a world of career opportunities outside of day-to-day operations. Development, franchise sales, brokerage, consulting, lending, asset management, as well as corporate leadership roles offer a myriad of opportunities.

The course is built around the process of preparing a complete underwriting model for a hotel acquisition. Each student picks a hotel to “acquire” and then prepares a spreadsheet model that includes a competitive hotel summary, a supply & demand analysis leading to occupancy and average daily room rate forecast and, ultimately, a revenue and expense projection that provides a firm foundation for the investment analysis. From there, students value the hotel using several different techniques, establishing the acquisition price. From this point, students will analyze different options for mortgaging the hotel including traditional mortgage finance and mezzanine financing. Finally, the students structure a joint venture arrangement with limited partners and calculate the investment returns anticipated from the transaction.

Why are you interested in this specific topic? 

When I entered college, my dream was to own a restaurant or perhaps work in a hotel. It was a total surprise to find out that there were many challenging but exciting opportunities supporting the capital investment side of the hotel business. The more I learned, the more it fixed my interest.

What I love about careers in this area is that they use every single class you take along the way in college. You need to understand hotel operations, design, development, accounting, marketing, and so on. Moreover, each transaction has unique challenges, so solutions require creativity as well detailed analysis. There is a great sense of accomplishment when you’ve been able to help a firm build and open a hotel, acquire a property, improve operations, or arrange a mortgage. Ultimately, in the hotel investment field you will be interacting with many of the top hoteliers, developers, and capital providers who will further expand your expertise and career opportunities.

What impact do you hope to have on your students through this course?

Employers in this field expect students to show up on their first day of work with a strong set of skills, including financial modeling skills, clear and convincing communications, and a level of professionalism consistent with the magnitude of the projects.

In our class the focus is not only preparing an institutional-quality underwriting model, but on developing sound support and reasoning substantiating the conclusions. I want my students to come out of our program not only with the skills to land that first job, but to ultimately be able to rise to leadership positions. Many have done just that!

Is there anything else you’d like to share? 

The rigor of the finance, development and investment courses at NYU SPS Jonathan M. Tisch Center of Hospitality has risen materially in recent years. We added some exceptional faculty, and our teachers push each other to be the best we can be. Moreover, the many opportunities for part-time employment and internships in NYC hotels make for a richer classroom experience. It’s been thrilling to see our students successfully landing positions with the top firms in the hotel investment spere. To know I’ve played a small part in this is exceptionally rewarding.

 

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