SPECIAL REPORT
market conditions as an opportunity to pursue general corporate themes or target competitors who don ’ t have the same financial flexibility . Similarly , there is significant private capital prepared to spend increasing amounts to build their own hospitality platforms and that are prepared to look at all type of deals , including smaller or individual assets , to achieve their objectives .
WHAT ARE THE ONGOING BARRIERS TO DEAL MAKING ?
Charles Human , HVS Hodges Ward Elliott : First , a lack of hotels for sale . As values rise , this should change . Second , the lack of debt financing available . We expect this to change as trading continues to recover and travel patterns normalize .
David Mongeau , J . Pedro Petiz , Avington Group : The largest barriers to deal-making remain
APPETITE FOR ACQUISITIONS IN EUROPE IS PROBABLY AS HIGH AS IT HAS EVER BEEN , ALTHOUGH MUCH OF THE DEMAND IS HOPING TO FIND DISTRESSED PRICING , WHICH BASICALLY DOESN ’ T EXIST AND IS UNLIKELY TO DO SO .
– CHARLES HUMAN
continued uncertainty surrounding new outbreaks of COVID-19 , seller value expectations which are out of sync with the market and their assets ’ capital generating capabilities , and a growing concern about inflationary and labor shortage pressures . All of these problems are likely to improve over the next 12 months , especially with central banks moving to stabilize interest monetary policy . However , we believe that an international coordinated regulatory framework for hospitality operations in a post-COVID world would have a significant positive impact for the industry globally .
WHAT IS THE STATE OF THE FINANCING CLIMATE ( DEBT AVAILABILITY )?
Charles Human : Very limited . Few mainstream traditional senior lenders are issuing new loans .
Alternative lenders are lending , but at opportunistic rates .
J . Pedro Petiz , Avington Group : Although central banking policy remains extremely accommodative , hospitality lenders remain cautious in their underwriting of transactions and are being selective in their approach to lending based on what segment their borrowers operate in . A full recovery of the meetings and events business remains several years out due to pandemicrelated restrictions , a reduction of business travel budgets , and a general preference for corporations to act cautiously and protect their employees . Lenders understand this , and as such , have been more cautious in underwriting properties in those segments . In contrast , lifestyle and resort financing activity remained extremely strong throughout 2021 and continues to benefit from ample , and low cost , debt availability .
WHAT IS THE POTENTIAL IMPACT OF INCREASING INTEREST RATES ?
J . Pedro Petiz , Avington Group : Over the last 18 months , we have seen one of the most accommodative interest rate environments in recent memory . As such , we do not believe that a move to stabilize monetary policy will be a drag on the recovery . Such policies will be the natural , and prudent , next steps for the recovery , and are likely to have a positive impact on some of the clouds over the industry ’ s outlook , including inflation , supply chain strains and labor shortages . We also believe that this next step of the recovery will ‘ clear the skies ’ and clearly show who the winners from this recovery cycle will be .
64 hotelsmag . com January / February 2022