Sierra Teply and Danielle Pastier were among the more than 1,200 University of Denver undergraduates who celebrated commencement on June 10. Well before graduation both students secured coveted jobs as managers in training for Marriott: Pastier will work for the Renaissance Hotel in Washington, D.C., and Teply for the Ritz Carlton in New Orleans.
While they had a wide variety of learning opportunities during their time at the Fritz Knoebel School of Hospitality Management, it was an unexpected challenge they took on that might be their most memorable experience. Teply and Pastier competed in the Hotel Asset Managers’ Association Competition, answering the question, “Is lodging still a good risk-adjusted investment?”
The two were in Associate Professor Amrik Singh’s lodging valuation class when the opportunity arose in the fall of 2016.
“We looked at each other and immediately knew we wanted to compete,” Teply said. “We both really enjoyed studying asset management and we wanted the challenge.”
To answer the posed question, the two gathered data from commercial mortgage-backed securities data and calculated certain measures to show how risks and returns on lodging are greater than other major commercial property types. From the data, comprised of seven different property types, totaling 81 properties, the students concluded that:
- Lodging properties have the highest investment risk relative to all other commercial property types.
- Rates of returns on lodging properties are higher than all other commercial property types.
- Lodging cap rates and equity dividend rates indicate that investors require higher risk-adjusted returns to compensate for the greater risk of lodging investments.
- Yes, lodging is still a good risk-adjusted investment. Its risks and returns are greater than other real estate classes.
The two ended up taking first place in the competition and presented their findings at the HAMA Conference in Atlanta on April 21 to about 100 people.
“This was the most beneficial experience because it tied everything we learned together,” Teply said. She explained that often hotel employees start off in operations and can work their way up to become general managers of properties. There isn’t much advancement at that point, however, unless people go into asset management. At the HAMA Conference, Teply and Pastier were able to network with the top asset managers in the country.
“It was such an amazing opportunity,” Teply said. “Amrik’s support was incredible. It was an amazing way to finish out our senior year. I feel such pride for our school. DU rocks!”