INVESTMENT
M & A :
MEGA-DEALS REMAIN CHALLENGING
As the economic recovery continues following the depths of the COVID-19 pandemic , the current market is making mergers and acquisitions ( M & As ) more and more attractive to hotel industry players . While a concentrated movement of merger and acquisition activity has been lacking thus far in the cycle , the large availability of private equity , low interest rates , the return of CMBS , and favorable liquidity in the debt market are enticing . However , compared to past “ headlines ” and brand-related M & A activity , such as the Marriott and Starwood
Hotels & Resorts $ 13-billion deal in 2016 , it appears that the effects of the pandemic have spurred more interest from hotel management and ownership-related companies .
While companies may always be investigating the prospect of large-scale M & As , mega-mergers are challenging to achieve in a mutually beneficial manner , regardless of the stage in the cycle . When evaluating a large merger , factors comprise an array of complexities , including revenue-generation strategies , longterm growth plans , and employee culture , as well as potential costsaving synergies , if available . Often , it seems these considerations are more available in companies that are smaller in scale or in comparable geographic markets .
For example , while Blackstone Group and Starwood Capital Group ’ s US $ 6-billion , 566-asset deal in June 2021 to acquire Extended Stay America was substantial , other instances of recent activity that follow the aforementioned line of thought include Terrapin Hospitality ’ s acquisition of hotel management company K Partners Hospitality ( undisclosed purchase price in September 2021 ), Blackstone Real Estate Partners
34 hotelsmag . com January / February 2022