The message at a MIPIM conference session on hotels was that property prices have to come down.
While equity remains readily available return hurdles are the same and, given more expensive debt, will only be met if asset prices are lowered.
Philip Ward, managing director, head of global advisory at Eurohypo, said: "The credit crunch is not over. We will have to live with it for at least the rest of this year."
While Eurohypo had been involved in transactions during the year, they had taken a lot longer as sellers had to adjust to prices "10%, 20% or 30% lower", said Ward.
"When we look at transactions, we can no longer look at revpar increasing. The projections are different to where they were nine months ago," he said.
The mainstream city hotel business is correlated to GDP and the recession in the US would cause problems, he warned. "Unless hotels decouple from GDP which few believe," he added.
An upside was that there is less competition with sovereign wealth funds prominent. Ward described them as "like a modern day Vatican". They (the SWFs) know what's going on and will be more active in the future, he predicted, although they would not replace banks.
Sonu Shivdasani, the CEO and chairman of Six Senses, said his company was in discussions with a number of SWFs. "It is more attractive pricing than private equity," he said.
Resort residential development was still a key focus for Six Senses, said Shivdasani. While the Caribbean had challenges in selling residential, second homes were selling well in Asia and this has fuelled resort growth.
The appeal of much of Asia was its low seasonality, said Shivdasani, and he was keen to keep close to the equator for this reason. In addition, there were low labour costs and sites where it was possible to create space and privacy, he added.
In terms of ancillary leisure developments, Shivdasani said that casinos were like golf courses and needed to be clustered. It was pointless building one casino or one golf course on a Greek island as both gamblers and golfers wanted variety, he argued.
Steffen Doyle, a vice president at Bank of America, agreed with other speakers that deals were taking longer. But he argued that terms were now more realistic compared to previous LTVs as high as 90%.
And he warned that the climate was global. "When I talk to colleagues in Asia, they don't feel the slowdown right now but they believe it is coming".
Jean Gabriel Peres, president and CEO of Movepick Hotels, said it was a different type of relationship dealing with SWFs but there was still a need to deliver value. "I went into a meeting in the Gulf to sign two hotels and they told me they had three more hotels as well," he said.
But Movenpick, which has about 40 of its 94 hotels in the Gulf, is more focused now outside of that region. "We have to spread risk," said Peres.