Skift Take
Economic downturns can lead to opportunity and heavy deal volume in the hotel industry, but coronavirus puts a major question mark on what a property is worth under the travel industry's uncertain future.
Plenty of hotel investment opportunities are to be had in an economic downturn, but it is a waiting game.
While many hotel owners and operators are struggling with depleted revenue per room and occupancy, investor talk is focused on how to capitalize on the hospitality industry’s recovery from the nosedive in travel demand. Once the hotel industry moves from survival mode from the initial impact of the coronavirus pandemic into a recovery, investors like Starwood Property Trust Chairman and CEO Barry Sternlicht are ready to pour capital into new properties.
But owners aren’t ready to sell until the economy is on strong-enough footing to offer some idea on a property valuation.
“For the underwriter of the equity, it's the question of direction how the rent is going. In hotels, they will recover. I personally don't think Americans are going to change their habits forever. I think this is the flu. It started out as a flu. It's a bad flu,” Sternlicht said on Starwood’s first quarter earnings call on Thursday. “But nobody's selling hotels or buying hotels, nobody, and believe me, we look. We try to buy here and there, but they're not going to sell on tr
