The global hospitality industry is coming off its worst year in modern history, but patient lenders and the volume of capital chasing distressed hotel deals are tempering expectations for large discounts. That's especially true because many of the private equity firms that have amassed billions of dollars in dry powder for US commercial real estate deals are chasing a subset of properties poised for more rapid recovery, according to a report from JLL. While lodging transactions have picked up in recent months as vaccine rollouts increase confidence in a travel rebound, investors are still waiting for the distressed opportunities that they have been anticipating since the pandemic forced thousands of hotels to shutter in the first half of last year.
"We've been calling it the illusive wave of distress," said Gilda Perez-Alvarado, CEO of the Americas hotel group at JLL. "There's a bit of a supply and demand imbalance, and the weight of capital chasing that transaction may erode whatever discount the market was expecting." Private equity firms are targeting hotels that cater to leisure travelers in Sun Belt markets that were benefiting from demographic trends before the pandemic, Ms Perez-Alvarado said. Such properties are positioned to capture drive-to vacation demand, widely projected to bounce back before long-haul flights, corporate travel or group conventions. Comments are closed.
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