Yesterday's announcement of a $9.83bn loss at Citigroup, the world's biggest bank, is the starkest illustration yet of the depth of the credit crunch. It creates the view that this year will be one of stagnation.
But while many banks are effectively out of the market and more interested in trimming loans than making new ones, others remain in business, albeit being pickier and charging more.
Relationship banking, a term readily bandied about for the last few years with little resonance, is now beginning to mean something. Hotel owners seeking finance are now discovering how good their own relationships with debt providers are.
Would-be borrowers have several hoops to jump: they need to be known to the bank; the lot size needs to be below about $500m; they need to put in more equity (25% to 30% seems a minimum); and they need to pay more (margins are up at least 50 basis points).
A well known debt financier told Hotel Analyst this week that while just six months ago providing a margin of 1.25% would have delighted a debt provider, today the floor is 1.75% and all but the surest of bets will be charged more.
This is no time to be an opportunity fund looking for a quick turn. There are, however, opportunities for private equity players taking a longer view.
There is also plenty of cash: according to London-based Private Equity Intelligence, last year saw at least $79bn raised for real estate funds, once the full data is in this total is likely to exceed the $85bn raised in 2006.
While the credit crunch slowed fundraising, it was not a dramatic slump. The first half saw $44.2bn raised while the second half saw $34.5bn raised. And Prequin believes that the signs for 2008 remain encouraging with some 266 funds on the road with 72 funds reaching interim closes with targets of $47bn.
For hotels, this money is finding its way into deals such as the purchase of the 348-room Munich Marriott by JER Partners which was announced last week.
Private money has also seen other deals crunched over the past few months. CB Richard Ellis Hotels this week announced it had sold Club Med's Kamerina resort on Sicily to the Ability Group for Eu62.5m on behalf of Heron International. The agent had earlier sold Ability the Cambridge Garden House, a property that was part of the Queens Moat House portfolio bought by Westmont. Ability owns the Hilton at Liverpool and the former Tulip Inn in Glasgow that is becoming a Premier Inn.
This latter deal typifies the current state of the market. A £400m transaction involving a wider Moat House portfolio of 19 properties remains stuck in the works despite there being a willing buyer, aAim, and a willing seller, again Goldman Sachs'Westmont. The portfolio deal is understood to have stalled thanks to last minute jitters by a debt provider.
Other notable single asset deals that have been recently tucked away include the Park Inn at Heathrow and the Victoria & Albert in Manchester, both bought from the Royal Bank of Scotland by Yianis, the owner of the Four Seasons and Marriott at Canary Wharf.
The Park Inn is an 881-room property leased to Rezidor on a turnover and base rent linked to RPI. When it was part of the proposed float of Vector in the early summer, the valuation put on it was almost £158m (net of purchaser's costs). Six months later it fetched a price which is thought to have been some 10% lower.
By contrast, the 148-room V&A, which is a hybrid management contract type agreement with Marriott under which the owner retains responsibility for maintaining the structure and shares in the operating risk via a rent linked to EBITDA, fetched close to the £25m valuation put on it in Vector.
There is a clear contrast here between the two agreements, a factor that seems to have proved more important than location, with the V&A in the provinces proving more resilient in value than the Heathrow-located Park Inn.
But most resilient of all appears to be luxury properties in gateway locations. The Waldorf, which was bought just before Christmas by private hotel owner and operator Gulshan Bhatia, is understood to have fetched more than it would have under the Vector float when it was valued at just over £159m net of purchaser's costs.
Derek Gammage, managing director of CBRE Hotels EMEA, which has been marketing the RBS portfolio, said that for five-star assets in prime city locations the credit crunch has had no discernable impact on pricing.
"Even lower down the food chain, the pick-up in underlying trade is often enough to absorb the yield drops," he added.
Looking further ahead, though, he concedes that there is currently a shortage of assets coming to market.