Excerpt from CoStar
The resiliency of the U.S. hotel industry and strength of its recovery through the COVID-19 pandemic has attracted the attention and capital of investors.
During a session of the Industry Real Estate and Finance Advisory Council at the Americas Lodging Investment Summit, Michael Bluhm, global head of gaming and lodging at Morgan Stanley, said the conviction of hoteliers over the past two years has inspired investors to take risks with capital to support the industry's recovery.
“Banks, regulators, private investors across the board really looked at this more as an opportunity to fix the business versus capitalizing on the distress,” he said. “You see it today in our valuations. It’s not dissimilar to what you see throughout the macro environment and equities generally, which is a kind of confidence around the business today — globally but certainly in North America — about how we’re going to recover coming out of this and the glide path to get there.”
The hotel industry has proven its resilience through demand, said Leeny Oberg, executive vice president and chief financial officer at Marriott International. Everyone can talk about the fundamental demand and belief in travel, but it’s another thing to watch markets around the world pop once travel restrictions eased and people felt comfortable traveling, she said.
“It really was remarkable, and I think incredibly comforting to investors, to lenders,” she said. “Let’s not forget that at the end of the day, in most countries, it takes a vibrant lending community to make sure that these deals work, particularly on the new-construction side.”
During the Great Recession, hotel industry performance dropped 25% before recovering, but this time was “a wildly different ride,” Oberg said.
Hotel owners and operators cut costs and worked through cash management issues faster than ever before, she said. Marriott executives also realized that the company's cash break-even point was better than expected, meaning it was possible to turn a profit at lower hotel occupancy levels.
Click here to read complete article at CoStar.