10 Minutes News for Hoteliers 10 Minutes News for Hoteliers
  • Top News
  • Posts
    • CSR and Sustainability
    • Events
    • Hotel Openings
    • Hotel Operations
    • Human Resources
    • Innovation
    • Market Trends
    • Marketing
    • Mergers & Acquisitions
    • Regulatory and Legal Affairs
    • Revenue Management
  • 🎙️ Podcast
  • 👉 Sign-up
  • 🌎 Languages
    • 🇫🇷 French
    • 🇩🇪 German
    • 🇮🇹 Italian
    • 🇪🇸 Spain
  • 📰 Columns
  • About us
10 Minutes News for Hoteliers 10 Minutes News for Hoteliers
  • Top News
  • Posts
    • CSR and Sustainability
    • Events
    • Hotel Openings
    • Hotel Operations
    • Human Resources
    • Innovation
    • Market Trends
    • Marketing
    • Mergers & Acquisitions
    • Regulatory and Legal Affairs
    • Revenue Management
  • 🎙️ Podcast
  • 👉 Sign-up
  • 🌎 Languages
    • 🇫🇷 French
    • 🇩🇪 German
    • 🇮🇹 Italian
    • 🇪🇸 Spain
  • 📰 Columns
  • About us

Through squinted eyes, hotel investors spy opportunities amid a haze of peril

  • David Eisen
  • 18 March 2025
  • 4 minute read
Total
0
Shares
0
0
0

This article was written by HotelsMag. Click here to read the original article

ATLANTA — Lee Hunter, chairman of the Hunter Hotel Investment Conference, walked on stage to “Highway to the Danger Zone,” a song popularized in “Top Gun,” a film about a maverick fighter pilot flying on the edge of peril. The hotel industry hopes its flight path forward is less precarious. And while it’s not pulling the eject cord yet, a smooth landing won’t come easy.

“We’ve never had this much uncertainty thrown at us,” said Robert Webster, vice chairman of CBRE, during a market overview session at the conference, here at the Marriott Marquis Atlanta. But that doesn’t mean there isn’t opportunity for investors if, noted Dan Peek, president of JLL Americas Hotels & Hospitality group, they show conviction to buy. It’s been a slog to now: Global hotel investment volume reached $57.4 billion in 2024 and while an increase of 7% relative to 2023, it was the third-lowest total since 2012.

Many believe the hotel industry and the broader economy are or are close to bottoming out, which can present buy opportunities, but higher interest rates and a still-wide bid/ask spread present difficulties. Asset values are off some 20%, said Teague Hunter, president and CEO of Hunter Hotel Advisors. “It’s been a tough last two years,” he said, with interest rates a headwind to hotels transacting. Still, he noted, there are dynamics in the market that could prove propitious for eager buyers. “The sellers are the institutions that are, for example, at the end of a fund,” he said, citing Blackstone and Brookfield. “They are at capitulation. Our book of business is thick and the capital is out there.”

Sponsored Post: How will the ‘great…
Trending
Sponsored Post: How will the ‘great…

Blackstone, as example, except in rare cases has pivoted away from hotel investment into areas including data centers and housing. “They like those products better,” said Peek.

Drying Up

Hotels have always been a risky asset class and the potential of recession would stunt travel demand, on both the corporate and leisure sides. GDP has a high correlation to hotel demand and according to a recent CNBC Fed survey, the average GDP forecast for 2025 declined to 1.7% from 2.4%, a sharp markdown that ended consecutive increases in three prior surveys dating back to September. “The risks to consumers’ spending are skewed to the downside,” said Neil Dutta, head of economic research at Renaissance Macro Research. “GDP is likely to come down, not go up,” said Webster.

The Market Overview panel at the Hunter Hotel Investment Conference. From left: Mitch Patel, CEO, Vision Hospitality; Greg Friedman, CEO, Peachtree Group; Robert Webster, vice chairman, CBRE; Dan Peek, president, JLL Americas Hotels & Hospitality; Teague Hunter, CEO, Hunter Hotel Advisors

At the same time is a stock market that is in correction territory, upsetting retirement funds and stock portfolios. Credit card data recently released by Citi showed U.S. spending on top luxury brands dropped 5% in February compared with a year ago, following two months of positive growth in December and January. It could be a harbinger of gloom for luxury hotels. A recent Wall Street Journal headline summed it up: Consumer spending is highly dependent on the affluent, who are highly dependent on the stock market.

Higher interest rates have proved a stumbling block to getting deals done. “There will be higher rates for a while,” said Greg Friedman, CEO of Peachtree Group, but believes there are buying opportunities, as owners decide whether to renovate or sell or sell due to loan maturities. “People are forced to sell assets and owners get more realistic on the value of their asset,” he said, which is helping bridge the bid/ask gap.

Though interest rates remain elevated, they are far from their highest peaks and, and as Hunter pointed out, people are getting more comfortable with 6% rates. “It’s where we spent much of our careers and that’s where we are,” he said.

“The ask is still remembering those low-interest-rate days,” Webster added. “Buyers are asking the ask to change their thinking.”

Friedman’s advice for investors is to be proactive because, in this environment, it’s taking longer to transact. “Banks have pulled back on commercial real estate,” he said.

Build Down

Travel is a fluid business. Real estate, the steel and brick and mortar, is not. New hotel development has tracked similarly with hotel transactions: It’s muted. “Demand is transitory; supply is structural,” Webster said, noting that supply growth is well of its historical levels of around 2% per annum. “It doesn’t make sense to build today,” especially in the upper end of the market, which is supply restrained because the math doesn’t add up. The math, he said: For every $100,000 a key in a new hotel, you have to get to $10,000 per year by year three of operating income per room to make it work at today’s borrowing costs.

Added Friedman, “It’s hard to develop in any market,” which is why some owners might be better off keeping what they have, as Webster noted. “Owning an asset where there is supply constraint leads to a run up in net asset value,” said.

And though building new hotels is a challenge in today’s environment, Hunter opined that hotels longer in the tooth might need to step aside for new ones. “The life of a box is 30 years,” he said. “Don’t fool yourself that a hotel that is 30 years old has value.”

Please click here to access the full original article.

Total
0
Shares
Share 0
Tweet 0
Pin it 0
You should like too
View Post
  • TOP NEWS

From Roadside to Remarkable: Motels Have Become Hospitality’s Quiet Tech Leaders

  • Automatic
  • 25 June 2025
View Post
  • TOP NEWS

The CMO’s comeback: Aligning the C-suite to drive customer-centric growth

  • Automatic
  • 25 June 2025
View Post
  • TOP NEWS

Unpacking the Guest Experience: Insights for the Modern Hotelier

  • Editorial Team
  • 25 June 2025
View Post
  • TOP NEWS

NaviSavi CEO joins ‘ThinkTank’ panel at…

  • Travel Weekly Group Ltd
  • 25 June 2025
View Post
  • TOP NEWS

Point B Restaurant Innovation Center Opens in Chicago

  • Automatic
  • 24 June 2025
View Post
  • TOP NEWS

Elavon and Wyndham Expand Collaboration with Cloud Payment Interface for Hotels

  • Automatic
  • 24 June 2025
View Post
  • TOP NEWS

First Hospitality Partners With Stayntouch

  • LODGING Staff
  • 24 June 2025
View Post
  • TOP NEWS

How OTAs are shaping hotel distribution in 2025

  • Automatic
  • 24 June 2025
Sponsored Posts
  • Influence Society Publishes Q2 Edition of Societies Quarterly for Visionary Hoteliers

    View Post
  • Case Study: Refinery Hotel Redefines Revenue Management with LodgIQ

    View Post
  • Day & Night: The Bold Rebranding Powering Shiji’s Presence in Global Hospitality Tech

    View Post
Last Posts
  • The Rise of Experience-First Hotels: Designing for Memories, Not Just Stays
    • 26 June 2025
  • Splendid Hospitality Group to invest tens of millions in their York hotels
    • 26 June 2025
  • Global Hotel Alliance Brand CEOs See Steady Growth In Travel Demand Despite Market Uncertainty
    • 26 June 2025
  • U.S. hotel performance update
    • 26 June 2025
  • Scandic’s new signature hotel The Dock 69°39 by Scandic opens in Tromsø, Norway
    • 26 June 2025
Sponsors
  • Influence Society Publishes Q2 Edition of Societies Quarterly for Visionary Hoteliers
  • Case Study: Refinery Hotel Redefines Revenue Management with LodgIQ
  • Day & Night: The Bold Rebranding Powering Shiji’s Presence in Global Hospitality Tech
Contact informations

contact@10minutes.news

Advertise with us
Contact Marjolaine to learn more: marjolaine@wearepragmatik.com
Press release
pr@10minutes.news
10 Minutes News for Hoteliers 10 Minutes News for Hoteliers
  • Top News
  • Posts
  • 🎙️ Podcast
  • 👉 Sign-up
  • 🌎 Languages
  • 📰 Columns
  • About us
Discover the best of international hotel news. Categorized, and sign-up to the newsletter

Input your search keywords and press Enter.