INVESTMENT
deliver on the property ’ s full potential . This growth comes on the heels of the reopening of Glover Park Hotel after new management and significant capital improvements .
Friedman is also a big believer that the best is yet to come for the hotel business , “ But you must not sit and wait – you must fix up your properties , knowing that the guest is different .
“ It ’ s going to be a total jailbreak . The millennials want to travel , the baby boomers want to get in whatever travel they can get . So , the desire to travel is timeless . And the vehicle to travel is through hotels . There are more digital nomads who will be accessing the world more than they ever had before while working , which is also going to add to the travel . The international travel is coming back , too . It ’ s going to be explosive .”
The big question , Friedman adds , is how to capture these guests . “ You ’ ve got to differentiate yourself , make the experience localized . And you must make sure that you ’ ve improved your asset . The people coming back post-COVID will need to see an improvement , a change that they can see , taste , smell . If you can do all those things , you are going to win .”
Last but not least , he points to further tailwinds because room supply should go down , while demand goes up . “ There is
THE MORE DOWNTOWN , AND THE MORE CORE , AND THE MORE HISTORIC AND THE MORE BEAUTIFUL , A BUILDING IS GOING TO BE MORE AND MORE VALUABLE . AND THOSE ARE THE KICKERS THAT WE ’ RE LOOKING FOR .
– BRIAN FRIEDMAN also inflation , and if you ’ re selling a great experience , on certain nights you can really get higher rates ,” he adds .
In closing , Friedman calls out traditional management companies , who could fall prey to new players in the space like Sonder , Selina and Yotel . “ They could come into your space as a single asset tenant and run a hotel in a way an owner has never experienced ,” he says . “ It is going to be a big disrupter for management companies . I can get a proforma from a management company , and they ’ re showing me that I ’ m going make US $ 2 million , which means my asset is worth US $ 40 million at a 5x cap . Or , I could lease it to Sonder or Selina for US $ 2 million , and not have to do any work . That puts them into the landlord business . I see a lot of fatigue from fellow hotel owners , and I think it ’ s going to be very attractive to want to go to that model . They would even take less ( US $ 1.5 million ) and have their time back .”
Hedging , though , as a real estate owner , Friedman says the toughest thing is to own a single tenant asset . “ When it ’ s good , it ’ s good . And when it ’ s bad , it ’ s bad .”
Rooftop at the recently acquired luxury Graham hotel in Washington , D . C .
32 hotelsmag . com January / February 2022