Hotels Opportunity Coming 2025? Low CapEx (vs pre-pandemic) + Debt Crunch

[Lucas Lukasiak]

Bjorn Hanson, an adjunct professor at the New York University School of Professional Studies' Jonathan M. Tisch Center of Hospitality, has released a series of CapEx studies showing hotel capital expenditure spending has been half of pre-pandemic amounts in period 2020-2023.

The impending debt crunch faced by commercial real estate over the next 18 months has also been widely reported.  This means that many hospitality properties need to refinance their debt at significantly higher rates in an environment where local and regional lenders have been pulling back.

In this podcast with CEO Greg Friedman of Peachtree Group, a private debt and hospitality private equity firm, he states that many hotel projects got shelved during the pandemic and that is bringing on an undersupply situation for hotel properties. It sounds like he believes CAP rates have a significant chance of going higher still given most likely conditions.

Hospitality can be highly risky as some asset types can be heavily affected by a recession and corporate travel restrictions.  However, the widely defined hospitality and leisure sector in general has been growing at twice the rate of GDP for many decades according to this podcast with Eric Resnik, co-founder and CEO of KSL Capital Partners, a private equity firm that specialise in the travel and leisure industry.

Thoughts?  Will someone be acquiring hospitality debt/assets in the next 18 months at incredible prices.