SP : I think this is a real opportunity given the refinance options will be limited based on the current debt conditions . However , I think this will depend on overall hotel demand strength .
There is still a strong belief that hotel demand will generally remain strong in 2023 and will gain more clarity on the impact of the Fed policy on inflation . As a result , hotels will continue to use their daily pricing power to push ADR and help offset higher costs of goods , labor and even debt until the interest rates start to level off and there is more optimism or guidance that rates will start to move the other way .
H : Describe the technology behind the platform ? SP : We are using a combination of a CRM platform for management of investor communications and pushing new deals and a back-end investment management software . This allows for efficiency for the investor and the platform when it comes to new content ( education , deal flow , general updates ). Investors will be able to have one place to see all of their investments through Jali .
H : What have been your biggest learns to date ? SP : We are working on the kinks on deal timeline , launch process and communication frequency . In fact , we recently sent a survey to our investor community to better understand what educational topics they want to hear more about , what their ideal investment / check size amount is for any one deal and how often they want to be communicated with .
H : What is your biggest challenge for the launch considering market conditions ? SP : Overall hesitancy based on the macroeconomic picture is probably the largest hurdle . Additionally , there is real yield now in traditionally safer investments ( cash , bonds , etc .). So , many people are being patient until there is a clearer picture on inflation and long-term Fed policy .
Although hotels provide a nice inflation hedge due to daily pricing opportunities , there will be concerns about dampening demand over the looming economic slowdown which will impact consumer and business spending .
We think that this is a real concern , but there are still markets with robust demand generators that can better weather this concern more than others .
H : How confident are you in the ability of the Jali platform to thrive considering near-term macroeconomics ? SP : I am highly confident in our ability to source great sponsors and deal flow despite the shortterm challenges . Many groups like ours have faced tough economic situations in the past and have been able to grow and come out stronger .
This is why the depth and breadth of the sponsor is so crucial in our philosophy because the value of the deal and investment is in the long-term and not dependent solely on the next 18 months . We want sponsors and developers that are disciplined and have enough experience to understand which levers they need to manage to navigate the short-term and thrive in the long-term .
H : What ’ s your expectation on asset pricing remaining stable , rising or dipping based on macros ? SP : This is a hard question to answer , but I expect that we will see a stabilization of values . I tend to believe that we will not see a large drop off in construction pricing back to or lower than pre-pandemic levels . A large part of this is that labor is much more expensive and while material cost has stabilized and in some cases declined , prices will stay elevated compared to prepandemic levels . We will not see those large increases we saw in 2021 and 2022 .
I believe this combined with inflation coming under control to the Fed target of 2 % to 3 % will help stabilize pricing and more deal flow will be transacted on as there will just be more clarity in the macroeconomic picture . I think if prices start to really fall it will be indicative of a larger and deeper recession and pull back in demand .
H : What is the exit strategy ? SP : I am not sure we have given this much consideration at this point . Our main objective is to grow and cultivate a very strong community of investors that want to add hospitality real estate to their portfolio by curating a strong flow of deals backed by experienced sponsors .
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