Real estate fund manager Alcion Ventures in November reportedly sold the 85-room Four Seasons hotel in Napa Valley ’ s Calistoga , California , for US $ 175 million ( more than US $ 2 million per key ) to Sunstone Hotel Investors .
HOTELS GATHERS INDUSTRY EXPERTS TO FORECAST M & A FOR THE YEAR AT HAND . THE TONE IS BULLISH , BUT THE ONGOING IMPACT OF COVID CONTINUES TO SET THE STAGE .
by JEFF WEINSTEIN , EDITOR IN CHIEF
is a strong believer in the long-term outlook for the hospitality industry globally . Avington Chairman David Mongeau and Managing Director J . Pedro Petiz say , “ Quick , resolute governmental action in the face of an unprecedented crisis enabled the global hospitality industry to endure the pandemic and to be in a firm footing for the recovery that is expected to ensue . As in any previous cycles , there will be winners and losers , but we believe that the global industry is well positioned today to thrive in a post- COVID world .”
Avington leadership went as far as to say it believes the hospitality industry is at the beginning of a new seven- to nine-year cycle of growth . “ How quickly the cycle will launch depends on COVID remission or resurgence , but for 2022 we expect M & A activity to continue to improve ,” Mongeau says . “ The global recovery and industry consolidation themes should be the key drivers of continued transaction activity across all sub-sectors of the industry aided by unprecedented ( albeit tightening ) levels of central banking intervention .”
Avington cited the luxury segment , which has already seen a significant pick-up in activity , with the bellwether indicator being the recently announced acquisition of a controlling stake in Four Seasons Hotels & Resorts by the interests of Bill Gates at an enterprise value of US $ 10 billion ( Avington acted as exclusive financial advisor to the selling shareholder , Kingdom Holding Co .). Similarly , Avington points to record prices being paid for luxury resorts , such as the Four Seasons Napa Valley , which reportedly transacted at US $ 2.1 million per key , or the Montage Healdsburg ( US $ 2 million per key ).
Guichardo says the U . S . accounted for nearly half of transaction volume for the first three quarters of 2021 and was pacing ahead of YTD 2019 by 15 %, adding that the continued push toward industry consolidation should make 2022 an active year of hotel investment .
Kyle Stevenson , managing director at Berkadia Hotels & Hospitality , says they expect that public entities will continue to look to grow by portfolio and companylevel corporate acquisitions .
Another way of looking at the M & A outlook might be to ask how conservative investors might be coming out of the pandemic , say Evan Hurd , Stephen O ’ Connor of RobertDouglas . They say deferred PIPs and other capex and FF & E expenditures might induce some owners to transform properties into boutique hotels or other property types , all of which could lead to asset sales .
Hurd and O ’ Connor also see continued strong interest in experiential lodging and hybrid concepts like apartment-hotel platforms . They ask , will the brands try to re-invent the sharing economy with what they can do best – a safe , clean , consistent experience ?
“ So , the real question is whether it will be a flight to the new perceived safe haven , drive-to , resort and select-service , or will we see meaningful investments in trying to expand the horizons of a hotel experience ,” Hurd and O ’ Connor
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