ONE HUNDRED PERCENT OF OUR BUSINESS COMES FROM REAL ESTATE INVESTORS, WHO CHOOSE US IF WE HAVE A PREMIUM GROWTH RATE |
– KEVIN JACOBS, CFO &
PRESIDENT OF GLOBAL
DEVELOPMENT, HILTON
this trio of pickups, it acquired Grand Hyatt Athens.“ We see more opportunity outside the U. S.,” Trebilco said.
Part of Blackstone’ s hesitance to buy is tied to interest rates. Private equity traditionally uses leverage to buy up real estate and when interest rates are high, it lowers deal values and overall returns. Trebilco said Blackstone expected seven rate cuts last year; they got three and the expectation is for rates to stay higher for longer. He remains optimistic that deals could pick up this year as credit spreads narrow, but bemoaned the still-elevated cost of capital.
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“ It’ s a different environment to get returns,” he said, partly why Blackstone, a thematic investor, has made a concerted push into other asset sectors, including data centers and multifamily housing.
Though Brookfield made some high-profile trades in 2024, Shai Zelering, its managing partner of real estate, said the company doesn’ t feel any pressure to sell and, instead, will be a net buyer in 2025.“ We are optimistic that the deal market will pick up,” he said, noting that Brookfield looked at around $ 6 billion in assets last year and pulled the trigger on $ 800 million of it, about half of what it initially planned to deploy. Low supply is giving owners the impetus to not divest assets as readily as they might: Why sell when cash flow is strong and new competition is depressed?“ Transactions are not being done because people are holding,” Zelering said.“ Why would I buy something else when I love what’ s in front of me?” And while Zelering may be delighted with Brookfield’ s current stance, he is not a full-on Pollyanna, pointing to government policies that are making the near-term cloudy.“ It seems self-inflicted,” he said,“ businesses want to invest and secular demand trends persist. Travel is recognized as a necessity.”
A COUNTRY OF CONSUMPTION It’ s a sentiment shared by Mit Shah, founder and CEO of Noble Investment Group.
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“ What we’ ve learned is every time that there is an impact on consumer confidence or demand, the consumer comes back faster and exceeds prior peak,” he said.“ Travel is aspirational, and we know that to be true, even when we think the world is ending.”
But the nebulous near-term effects outlined by Zelering are making it hard on investors to do what they do best: buy and sell assets. It’ s certainly impacted Shah, who said he still wasn’ t relenting on the company’ s plan to sell some $ 1 billion in assets this year and buy $ 2 billion.“ It’ s a wonky environment,” he said.
Hotel investors commanded the dais, but it was populated by a lone hotel brand executive( and sacrificial lamb), Kevin Jacobs, CFO and president of global development for Hilton, who, while not hounded, was put to the test, especially on how brands can be better aligned with owners, as Trebilco suggested.
“ When I look at how much Hilton and the other brands have grown over the last decade in multiples in terms of size of the system, size of the revenue pool and all of you [ franchisees and owners ] still pay the 4 % marketing fund, which is clearly much bigger today,” he said.“ What I would ask is: Where is the partnership in that? Why are we not transferring some of that growth and scale and economies of scale and efficiencies to the owners who are feeling the pain when revenue isn’ t growing the way
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they want them to and expense ratios are all over the board? It feels like the best position is to try and help us make this a little bit better.”
For his part, Jacobs wasn’ t defensive but understanding, telling the audience that Hilton was currently working on some things internally to drive cost savings to owners and franchisees.“ It’ s the ultimate symbiotic relationship,” he said.“ One hundred percent of our business comes from real estate investors, who choose us if we have a premium growth rate. We need to drive returns so
WHAT WE’ VE LEARNED IS EVERY TIME THAT THERE IS AN IMPACT ON CONSUMER CONFIDENCE OR DEMAND, THE CONSUMER COMES BACK FASTER AND EXCEEDS PRIOR PEAK
– MIT SHAH, FOUNDER & CEO,
NOBLE INVESTMENT GROUP
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May / June 2025 hotelsmag. com 11 |