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Coronavirus

Hotel Deals and Lending Zapped by Coronavirus at the Finish Line

Cameron Sperance

Photo Credit: Lenders have taken a wait-and-see approach on hotel deals slated to close before coronavirus spread globally.  Pexels / Macki Ladrera

Skift Take

Until lenders can wade through the $2 trillion U.S. stimulus package and determine valuations, hotel deals will remain on ice. Expect smaller banks to issue the first round of hotel loans on the upswing.

Heading into 2020, the hotel sector was expected to slow down, but deals were still getting financed. Then came coronavirus. U.S. hotel investment sales were already down 21 percent in 2019 and on track to decline an additional 6 percent in 2020 due to election year uncertainty, according to a February JLL report. Coronavirus uncertainty pushed the industry's investment nose down even further. Banks have shored up lending to the hotel sector over the decimated travel demand, and investors tell Skift that will include previously confirmed deals. “Generally speaking, there is not a marketable number of buyers or willing sellers, and that creates a difficulty on the valuation side,” LW Hospitality Advisors Chief Operating Officer Evan Weiss said. “There’s always going to be value in an asset, but the question is how is all of this going to shake out?”

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The hotel sector has been one of the most active for travel industry mergers and acquisitions in recent years. That spawned years of unprecedented growth, with Marriott announcing in 2019 plans to expand by 1,700 hotels over three years. The only thing that seemed to impair hotel expansions was a construction worker shortage. But coronavirus threw a wrench in all levels of hotel deals, ranging from construction and acquisition financing to refinancing of existing properties. LWHA specializes in hotel valuations and advisory services, and Wei

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