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it’ s a roadmap: 1) The first year is spent planning what to do now that it owns the hotel, what types of renovations are needed and how to reposition the hotel successfully. 2) In the second year, it’ s about implementing the plan built out in year one. 3) The third year revolves around stabilizing the asset. 4) In the fourth year,“ that’ s when we start to look to potentially exit,” Hehir said, adding,“ You don’ t want to run into things without having the proper work done up front.”
SIDESTEPPING POTHOLES It’ s a four-year plan, not five, and though hotel transactions have been stunted coming out of the pandemic, a fastpaced, frenetic market for hotel deals could be just up around the bend, especially since hotels as an asset class have shown resilience in tough economic times and
Sean Hehir is president and CEO of Trinity Investments, which focuses on investment in full-service hotels.
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boom times in favorable ones. A heavy expediter of hotel trades is interest rates, which remain willfully high in the face of stubborn inflation. Still, as Hehir suggested, Trinity’ s portfolio remains in an advantageous position.“ We typically trade around a 7 % cap rate, so can absorb 8 % interest rates,” Hehir said, noting the narrower spread. Other asset classes and even other types of hotels don’ t have that luxury.“ It’ s more challenging when you’ re trading at 4 % cap rates and you’ re reliant on fixed-rate loans at 100 basis points tighter than that,” he said.
Though some hospitality executives have bemoaned the lack of available debt, Hehir said Trinity has not faced such obstacle, having executed close to $ 3.5 billion dollars’ worth of either financing or refis over the last 18 months. And with new supply tracking at historical
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lows, Trinity, with a portfolio of hotels in high-barrier-toentry markets, remains in an advantageous position. Hehir doesn’ t appear worried over the spigot being turned on fast for new construction, especially in the upper-upscale to luxury realm.“ It’ s very hard to get the approvals and the entitlements,” he said.“ You don’ t really see it happening unless there is, for example, local government subsidies and tax abatements.” The last component of it is the availability of construction financing, which Hehir noted“ a lag,” pointing to the regional banking crisis of 2023,“ that has created a little bit of illiquidity in the debt markets.”
Hehir’ s road to success in hospitality has been less bumpy and it was helped paved by a push from his father. When Hehir, who grew up in Botswana, reached 18-yearsold, like many aimless teenagers
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he wasn’ t sure what to do next. His father recommended hotel school.“ He looked at me, and said,‘ Sean, you like people, you like travel and you like business.’ That was the catalyst.”
He kicked off his hospitality matriculation in Switzerland and did his first internship at the famed Baur au Lac in Zurich, where starting at the bottom as a busboy instilled in him his love for the business. He eventually came to the U. S., first taking courses at UNLV before graduating from Cornell and its well-regarded hospitality school.“ I couldn’ t imagine doing anything else,” he said. Hehir has steered more than $ 8 billion in investment during his 25-plus-year tenure with Trinity. Unlike some real estate groups that spread capital across various asset groups, Trinity solely invests in hospitality and with a current portfolio of 15 full-service hotels and resorts, it will keep it that way. For full-year 2024, Trinity invested more than $ 730 million globally in hotels and hospitality assets across the globe. Unlike other asset classes, which typically come with fixed leases, such as office or multifamily, hotels are an operating business cloaked in real estate, where lease terms change daily.“ It’ s a nuanced asset class,” as Hehir put it, which makes asset management and project management intrinsic to overall success rates.
For Trinity, success might not come in threes, but like a threepeat, it’ s repetitious.
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26 hotelsmag. com May / June 2025 |