European Hotel Investors Remain Patient, Disciplined, Experts Say
Usually deemed to be bedrocks of nerve and insight, investors also have been on a rocky road through the COVID crisis, but success in real-estate investment in the hotel industry continues to rely on flexibility, constant analyses of strategy and a focus on liquidity.
Speaking at an International Hotel Investment Forum panel titled “The shape of things to come,” investors reiterated the clarion call for risk to be more shared and alignment close to perfect.
Brian Kaufman, managing director of real estate at investment firm Blackstone, said the crisis has led to stronger bonds and more touchpoints between investors and operators, notably around efficiencies and labor issues.
Cody Bradshaw, managing director and head of international hotels at Starwood Capital Group, said the pandemic has shown investors who the premier operators are.
“Are people bring these problems to you, or are they bringing these problems along with six or seven solutions?” he said, noting that labor shortage and wage pressures are the critical challenges, with “no curve in sight.”
Benjamin Habbel, CEO of Limestone Capital, said the right partnerships are everything, especially for companies that are more entrepreneurial in spirit.
“We look to partner in the areas we are not so good at, but we’ve become more nimble. We also need to be totally integrated,” he said, adding the firm recently bought its first Spanish asset, the 51-room Aethos Mallorca, formerly the Mar y Pins.
“There always is conflict potential if it is not your capital, so we start with our own,” he said.
Kaufman said investment is becoming more proactive than ever, especially at both ends of the industry — budget and luxury.
“No one had this experience [the pandemic], whether it was the Great Financial Crisis, the dot.com bubble bursting, 9/11. It’s about liquidity and cash. In the U.S., we have shifted to the proactive, to best position our assets to perform better when we come out of the pandemic,” he said.
Dominic Seyrling, director of investments at Archer Hotel Capital B.V., said his firm is interested in long-term capital but it has now spent more time in the pandemic than out of it.
“Our focus is on creating value up and above where assets were positioned pre-pandemic. This comes from an ongoing rethinking of our strategy, improving our operating capabilities, showing returns to shareholders and obtaining the highest guest scores,” he said.
“We came into the sector with open eyes. What we are now doing is doubling down on our hotels, as there are few new assets coming onto the market.”
Flexibility and pivoting on strategy are all fine, but patience and discipline remain key, panelists said.
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