Skift Take
It's nearly time for opportunistic investors like Starwood Capital's Barry Sternlicht to swoop in on distressed hotel assets, but they'd better have the pockets to stomach at least another year of no returns on investment.
The economic fallout from a global health crisis can amount to a huge opportunity for investors with billions of dollars ready to deploy on distressed assets — investors like Starwood Capital Group CEO Barry Sternlicht.
That's because hotel owners battling months of record low occupancy rates and uncertain travel demand are poised to default on their loans in coming months. While current owners would lose out under such a scenario, where a bank takes over the property, investors and major hotel brands are expected to swoop in and ultimately benefit.
While noting his “empathy hat is filled to the rim,” Sternlicht was clearly elated by the growth opportunities that lie ahead for Starwood Capital-affiliated brands like 1 Hotels and Treehouse Hotels.
“As an investor, I’m really kind of tickled to death … There’s going to be so much distress,” he said Monday at the Saudi Arabian Ministry of Tourism’s Future Hospitality Summit. “I think there will be tremendous opportunity for investors, but your timing is going to be critical.”
Starwood Capital is scheduled to close at the end of the month on $6 billion of a $7.5 billion fund — ammunition Sternlicht said would go toward buying distressed assets that could fuel growth of hotel brands under his company’s SH Hotels & Resorts division.
The growth strategy mimics one the investor used previously with W Hotels, a brand now owned by Marriott following its $13 billion acquisition of Starwood Hotels & Resorts in 2016. Sternlicht built up the W Hotel portfolio by acquiring independent
