The Wall Street panel , from left : Teague Hunter , president and CEO of Hunter Hotel Advisors ; Apple REIT CEO Justin Knight ; Scott Trebilco , sr . managing director in the Blackstone Real Estate Group ; Jonathan Stanner , president and CEO of Summit Hotel Properties ; and Marcel Verbaas ., chairman and CEO of Xenia Hotels & Resorts . time to digest .” Blackstone , acquisitive by nature , hasn ' t tapped the debt markets for nine months , Trebilco said , adding , “ It ' s not fun doing no deals for nine months .” One of Blackstone ' s last major deals in hospitality was its 2021 acquisition of Extended Stay America , with partner Starwood Capital , for $ 6 billion . “ We leaned into extended stay as kind of a derivate of housing ,” he said .
No matter the headwinds , hotel executives remain positive , even bullish , on the state of the hospitality industry , especially from an operational perspective . “ To date , we are not seeing impact on our business ,” said Knight . “ Fundamentals are still strong , there is just a lot of macro noise . Leisure demand is still strong , though things on the periphery do make our business more challenging ,” things like inflation and the attendant rising interest rates ( the Federal Reserve continues to bump up rates ) used to quash it . The rise in interest rates has made it more difficult to obtain well-priced debt , and raised the cost of capital , but debt is out there for good deals accompanied by strong sponsorship .
“ Debt isn ’ t a barrier to doing a deal ,” Trebilco said , but “ transactions are getting more challenging ,” Knight said .
Jonathan Stanner , CEO of Summit Hotel Properties , also a REIT , still isn ' t entirely sure how all this bank trouble will shake out , but one thing is certain , he said , this is not 2008 and the global financial crisis . “ What we don ' t have are credit quality issues ,” he said . “ This is a crisis of confidence .”
Indeed , these aren ' t the freewheeling days of auto appraisals and loan-to-value ratios of 80 % or higher , as Teague Hunter , president and CEO of Hunter Hotel Advisors , pointed out . LTVs now shake out closer to 65 %. “ The banks should be in better positions ,” he said .
A similar sentiment is shared by Marcel Verbaas , chairman and CEO of Xenia Hotels & Resorts , a REIT that owns mainly resorts and luxury properties . “ We are certainly in a better place than 2008-2009 and have come out with stronger balance sheets ,” he said , though offering that refinances coming due could create some issues . In fact , Verbaas said , “ We look at it as opportunity — more product coming on the market .”
With the cost of capital now higher , combined with a wobbly stock market that has sent stock prices down , many public companies have turned to buying back shares or investing capital back into their properties . Many private companies , more dependent on leverage , have stepped in to the fill the void .
As the capital markets shake out , hotel operating performance doesn ' t appear to be waning . Booking windows remain shorter , but midweek business is seeing huge growth , Stanner said .
Xenia ' s Verbaas echoed Stanner about midweek occupancy picking up strength . “ Fundamentally , we are in a good spot ,” he said . “ We went through the worst thing ever .”
May 2023 hotelsmag . com 11