IMN – Distressed Hotels Virtual Forum Report
On February 18, 2021, IMN held their 2nd Annual Distressed Hotels Virtual Forum. Tom Hamm, Hotel Broker out of Stamford, CT and Director of the SVN Hospitality Council provided some excellent highlights from the event.
- Cost headwinds are facing the hotel industry with respect to mandated wage increases, higher cleaning costs, taxes, and brand standards. This means it will take much longer before hotels will be able to achieve full normal level of debt service even when demand recovers: the runway has been exhausted.
- Over next 3-4 years many hotels will become “tired” since they have had to raid replacement reserves just to stay afloat. This may open the door for new build competitors to enter the market, although construction financing will not be available in the near term.
- Owners are analyzing their portfolios – whether to buy, sell or hold. Some are redeploying assets to position them to make opportunistic buys.
- Investors are not seeing the discounts they want/ expected. They expect fewer brokered deals. Plenty of capital on the sidelines. Looking to do optimistic buying but at realistic underwriting. Common thread is that best money is made on the purchase. Underwriting needs to take into account that buyers will be increasing their basis by having to write checks at least for a couple of years to carry the purchased asset. Better to buy a great property at a fair price than a fair property at a great price.
Tom Hamm – Director of SVN Hospitality Council – Direct: 203-653-5171 [email protected]
IMN, founded in 1994, is a global organizer of institutional finance & investment conferences. In 2004, the business was acquired by Euromoney Institutional Investor PLC, a UK company listed on the London Stock Exchange. www.imn.org/company/about_us