Steve Canty
Director, GRS | Corteq
(858) 433-0441
[email protected]
There were a few indicators last year that have led commercial real estate observers to believe that 2018 is going to be a strong year for the hotel sector, and some of that is already coming to fruition.
The year ended with lodging stocks ending on a high note, with them rising 32 percent over the course of the year, and more of the same is expected for 2018. Some of the reasons for this, STR said, as quoted by Bisnow, are a peak in supply growth, tax reform and demand in hurricane-hit Florida and Texas.
Some big deals have already happened so far this year. Blackstone recently dropped $1.1 billion on a resort, the Waldorf Astoria-branded Grand Wailea, on the Hawaiian island Maui. It is reportedly the second-largest hotel deal ever.
At a recent Bisnow conference, it was also reported that China-based investors are once again interested in making big hotel buys in the United States. That’s after Chinese investment over the first three quarters of 2017 was only one-third of what was spent during the same prior-year period.
Additionally, the Buccini/Pollin Group, which just bought the Hilton Melbourne [Fla.] Rialto Place is going to be active this year, both on the acquisition and development fronts, according to company executives. BPG reportedly spent $30 million on upgrading its portfolio last year, and the firm is in the process of opening its new Embassy Suites Midtown Manhattan this month.
Meanwhile, Sunstone Hotel Investors recently sold a pair of Marriotts, in Philadelphia, and Quincy, Mass., to an undisclosed buyer for $139 million.
These activities are in line with a CBRE report in November on the hotel sector. It predicted that record levels of occupancy would be enjoyed in lodging through 2019, due to continued income and employment growth.
The report also outlined a few challenges facing hotels. ADR (average daily rate) growth is not in line with historic increases, due to a jump in supply, which could hurt the profitability of some lodging companies. Additionally, CBRE found that while the sector is very healthy on a national basis, certain metro areas are pulling most of the weight. Of the 60 markets it surveyed, half saw declines in RevPAR (revenue per occupied room).
Of course, whether or not a sector is doing well overall, as with any type of commercial real estate, location is vital. But viewing things from a national perspective, it’s hard to complain about good news.
About GRS Group
GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with a global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions.
Through the company’s proprietary management process, Global Services Connection, GRS Group delivers an integrated suite of services including Financial Advisory, Transaction Management, Assessment and Title Insurance. We provide a single point of contact, capable of leveraging the GRS Group portfolio of companies and delivering customized solutions to assist our clients in achieving their investment goals.