TRENDING : BISNOW EVENT
Expectations were that the pandemic and attendant impact of it would create a distressed asset environment ; to now , it hasn ' t come to fruition . Yet . “ There is not a lot of distressed assets on the market ,” Magazine said . The amount of CMBS loans coming do could change that . “ There is some anticipation of that ,” Magazine said . “ Lenders are working with owners , but there is still a [ wide ] spread between sellers and buyers . The job is to try and get them closer together .”
It ' s not just loans coming due that could force transactions . In the wake of the pandemic , property improvement plans ( PIPs ) were avoided by owners and accepted by the brands . The latter , now , are restless and less compromising . “ Stress is building ,” Bhoopathy said . “ PIPs are coming after three to four years when hotels needed to renovate .”
WHERE TO BUY Every buyer is looking for diamonds in the rough , like English ' s Excel Group , but also being able to understand the market and not pull the trigger on a deal that might not produce the return down the road . Excel Group , for example , pulled out on a deal in Long Island
City because of what it deemed too much supply coming into the market .
Capital is still going into where the recovery has been : leisure , resort , drive-to space , extended-stay and economy , which is where more of the brands are going , too . ( New brands , such as Hilton ' s Spark and Hyatt Studios fit the bill .)
The markets that haven ' t yet returned are the downtown core markets that are still awaiting corporate and group business to return with gusto . According to the data , the worm is turning : CoStar expects business travel to bounce back in full by the end of 2023 .
“ Downtown hotels and big boxes will come back in favor because their prices will fall ,” Magazine said . “ Conferences and conventions will pick up .”
Bhoopathy said part of his investment strategy is to “ follow net migration ,” meaning where populations are moving to . The south , currently , is having a renaissance . “ Florida , Nashville those core markets are where to be ,” he said . “ There is no shortage of buyer pool .”
" The south is getting a lot of play ,” Magazine said , ticking off cities including Nashville , Austin and Tampa .
36 hotelsmag . com June 2023