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Patrick Mayock
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Jan Freitag
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The Lobby a social network from HotelNewsNow.com
Thursday, 27 January 2011

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It’s officially time to buy hotels
Posted by Jason Q. Freed at 12:00 AM

Sorry hotels brokers, you must now return from the golf course and get back to the business of selling hotels.

If you weren’t sold on the fact that the United States hotel transactions market is back, the Americas Lodging Investment Summit 2011 has been confirmation. The conference is back to its 2007 heyday, when more people were huddled in the hallway shaking hands than in educational sessions cursing the banks.

The debt market is opening up … with an emphasis on careful underwriting. (And that is a good thing, unless we want to end up back in the same over-leveraged/distressed/foreclosure mess five years from now.) 

Owners and asset managers are confident they can buy properties at discounted prices and reposition and/or rebrand them to turn significant profits.

“We’re willing to take a higher risk and a higher level of volatility,” said Mit Shah, CEO of Noble Investment Group. “With some of the private debt markets opening up a little bit, you can in fact think about two-times multiples and 20 IRRs again.”

In case you still aren’t sold, more evidence of increased investment can be witnessed in recent headlines from around the industry:

• Just yesterday, we learned Choice Hotels International will open two Cambria Suites properties in New York City. These openings are significant because 1) They’re new-build properties in New York and 2) Choice is kicking in some sliver equity to get them out of the ground. A Times Square Cambria will be developed by Extell Development Company and a Chelsea property will be developed by Robert Chun of We Care Trading Company.

• Host Hotels and Resorts bought the famed 773-room New York Helmsley from Leona Helmsley Estate for US$310 million and plans to spend US$50 million in renovations, according to a report in The Wall Street Journal.

• And finally, Jones Lang LaSalle Hotels reported Monday there were five times more deals in 2010 than 2009 and deal volume is expected to increase 15% to 25% globally in 2011. More than US$11 billion in assets traded hands in the U.S. in 2010, JLLH said. At ALIS on Tuesday, Shah predicted US$20 billion in deals will take place in 2011.

Follow Jason on Twitter @HNN_JQFreed



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3 Comments
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27 December 2011 at 11:31 PM Central Time
In response to: It’s officially time to buy hotels
zkali commented:
ah...ok figured, sorry.

27 December 2011 at 11:30 PM Central Time
In response to: It’s officially time to buy hotels
zkali commented:
what's happening with the date on your website? are we moving backwards in time?

28 January 2011 at 9:01 AM Central Time
In response to: It’s officially time to buy hotels
anonymous commented:
Well, the main impetus is investment speculation, and prime investment opportunities, not a huge capital "optimism" as this article suggests. Just as the predatory and vulture like capital in private equity and elsewhere aligned for the RMBS debacle, so it is realigned for the CMBS earthquake to roll across the commercial landscape from hotels, to commercial and retail. Since this change is systemic, and structural, not isolated and cyclical, the forecasts of everything returning "back to normal" in 5, 10 years, is a linear math based pipedream you can also use to reverse engineer the last 20 years. The next 20, though, will be much different. If the co-creator of the instrument had these feelings as far back as the late 1990's, you may peruse your own website, and contact Joel Ross and ask him what he really thinks. It is quite striking how the bum on the street can clearly see where not just America, but the world is headed, because the coming currency battles, to be fought globally, will though survivable, create reactions amongst the industrial brats war machines, spoiled beyond human recognition, which will not be. In the age, when everyone could have fulfilled the philosophical rhetoric of the blessings of industrialism, and all her little political daughters, and used the wisdom age, when information is applied for the benefit of all, for the benefit of all, instead the advanced information systems enabling global financial predation, by foresight, where used to cannibalize the whole, by the whole. That is the legacy, which mankind will leave behind, and when the dust clears, it won't be able to be denied to the future race who will clean up the mess. But it will never, repeat itself. You'd have to be an idiot! LOL This late in the game, with such research tools and mountains easy to dig from, how can we be so naive? Blind faith in money, that's how. A deity worth being put to the test. LOL



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