INVESTMENT
What doesn ’ t kill the bull market
ONLY MAKES IT STRONGER
EXPECT MATERIAL INCREASES IN BOTH REFINANCING AND SALES ACTIVITY THIS YEAR . FORTUNATELY , THERE IS NO SHORTAGE OF READY AND WILLING BUYERS .
Contributed by STEPHEN O ’ CONNOR , PRINCIPAL AND MANAGING DIRECTOR , ROBERTDOUGLAS
Life with COVID continues to be quite challenging and has included some unexpected or ironic twists for the hospitality industry .
For instance , the recurring waves of COVID variants and attendant restrictions on quarantine , masking and gathering that makes international air travel so difficult continues to support peak levels of demand for domestic resorts and other drive-to locations , resulting in bumper profit levels and recordbreaking transactions .
Similarly , the COVID adjustments to hotel operating standards and procedures , some mandated by the brands or regional authorities , others borne out of necessity , have had a dramatic impact on utilization of labor , the guest experience and , ultimately , profitability . This is most notably seen in reduced housekeeping services , something that operators had already been experimenting with or considering pre-COVID .
Thus , the overall fewer fulltime equivalent man-hours for properties of all classes are hastening a transition that was already underway . Clearly , this will reshape the hospitality sector into a more automated , streamlined and more profitable business , albeit one that employs fewer people . Most operators are reluctant to give up some of these painfully gained advantages or insights , especially with so many cost escalations coming at them in other ways , including for basic supplies , utility costs , any construction expense or wage rates for the staff they do hire .
STRONG INVESTMENT INTEREST Seasoned hospitality investors recognized the threat ( and future opportunity ) that the pandemic represented to the sector and rushed to raise funds to provide “ rescue capital ” and make “ opportunistic ” investments but have been largely frustrated in deploying this capital . What is more interesting are the many new entrants into the hospitality sector , including entrepreneurial spinoffs from larger investor groups . It seems that for every closed-end private equity fund that mistimed their investment and is going to
56 hotelsmag . com March / April 2022