Involved In Real Estate · Center Line, MI · Member since 2014 · 39 posts · 24 votes
Is there anyone out there that is actively investing or interested in investing in hotels? I am a hotel operator and I absolutely love the business model tenants/guests pay you rent every night. Obviously there is much more involved, but at the core this is what the business is to me. In my eyes it is a great time to buy established properties because the cost is still below that of building new hotels and there are plenty of solid deals around especially in Europe (compliments of Barry Sternlicht's interview on Squawk Box this morning). As I get older though it seems like there are always good deals around if you know where to look or better yet if people know where to look for you. I heard someone say the deal of a lifetime comes around about once every week, just be ready when it does.
I am very interested in investing in hotels. We have a hotel construction company so we are constantly in the hotel arena. We actually did a Sheraton and a Hilton project not far from you a few years ago. Last year we almost bought a hotel project. The deal ended up not coming together (price) but it was a great learning experience from a hotel investment perspective. We are still on the lookout for hotel projects and will hopefully add hotel investing to the business over the next few years. The market is extremely hot right now though...as I am sure you know REVPAR is up across the board and deal activity is high as well.
I am very interested in investing in hotels. We have a hotel construction company so we are constantly in the hotel arena. We actually did a Sheraton and a Hilton project not far from you a few years ago. Last year we almost bought a hotel project. The deal ended up not coming together (price) but it was a great learning experience from a hotel investment perspective. We are still on the lookout for hotel projects and will hopefully add hotel investing to the business over the next few years. The market is extremely hot right now though...as I am sure you know REVPAR is up across the board and deal activity is high as well.
Maastricht, The Netherlands · Member since 2013 · 131 posts · 18 votes
12y
I have worked on two boutique hotels this past year. It was very interesting to be introduced to the hospitality business. As @Chris Winterhalter says though, the industry is cut-throat right now.
Europe is interesting indeed, but only in the boutique hotel industry if you ask me. A lot of unique property out there that can easily be converted, like old manors in large cities. Some cities are protecting every last piece of them, meaning you will never be able to build a new high rise in the dead center of a city like Maastricht, Amsterdam or Brussels.
Outside of those, huge office buildings have been converted by big firms these past few years. They were able to get them at 100 EUR/sqft even, I heard.
We are actively involved in hotel financing and work with owners and operators around the country on all asset types, from limited service to upscale resorts. As you mentioned, the industry certainly offers a lot of opportunity, however success is much more dependent on the skills of the operator than other types of real estate.
For good flags in locations of major metro areas with experienced operators, we are seeing lenders get very aggressive in their terms. The market is definitely strong as @Chris Winterhalter suggests. Hotel investing is a very exciting industry with a lot to learn beyond traditional real estate investing.
Amherst, OH · Member since 2013 · 26 posts · 1 vote
12y
Our Firm with a few lenders that specificly do hotels and resorts both here in the U.S. and some oversea lending as well. Minimum Loan is 5 million with an interest rate around 4.5%. If interested in a specific property make an offer and let me know if I can help you.
Involved In Real Estate · Center Line, MI · Member since 2014 · 39 posts · 24 votes
12y
My ultimate goal within the hotel industry (outside of real estate investment) is to work on the acquisitions and development side of things. does anyone have any suggestions on how to transition from the operational level (where I am at now) to acquisitions and development? Although I like my job I get a bit tired of the day to day "babysitting" of staff, vendors, owners, brand standards etc, I love the art of making the deals happen and I want to start making my way there.
Do you work for a small or large management company right now? A lot of management companies also own, develop, etc. I think if you were to work for a growing management company (smaller) and expressed interest in transitioning over to the acquistion side that you could make it happen. Being upfront about your goals will be very important. You also need to get out there and network...go to conferences and get your name out there. Are you currently a GM? Have you been successful or shown the ability to turn around a hotel? I definitely think that will help. As you know the hotel industry is very small.
Good idea on your transformation quest!!! I think to get business transformation experts you might create another thread like: "how do I build a hotel buying, value add, development business?
To bring in other industries experts you might mention in the body of your question, mention multi-family and other industries because transforming your hotel business might be similar to transforming MF operation to MF aquisition, value add, development??
Involved In Real Estate · Center Line, MI · Member since 2014 · 39 posts · 24 votes
12y
@Chris Winterhalter I am currently an AGM and I just went down to Boca Raton, Fl to help us implement the proper systems at a Fairfield Inn and Suites that we just purchased. They did offer me the GM position but I was not able to take the job because my son lives in MI and I couldn't leave. We are a relatively small company (approx 35 properties) and I have expressed interest in the transition. The only issue I have is that the corporate office is in CT and once again, I live in MI so I'm slightly limited there. I love the idea of networking and attending more conferences. Thanks
Flipper/Rehabber · Fayetteville, AR · Member since 2016 · 130 posts · 62 votes
5y
@Haseeb M. I’d also love to hear opinions from those with more experience. I’m currently starting to perform some due diligence on a small hotel with a bar and restaurant in a tourist town in Northwest Arkansas and would love to hear some thoughts from some asset based (hard money or private) lenders with hospitality experience.
Commercial Loan Broker · Bloomingdale, NJ · Member since 2013 · 5 posts · 4 votes
5y
@Haseeb M.@Mike Castellow We are still actively financing hotels although there are fewer active lenders and they are certainly more conservative in their terms (lower leverage, higher rates, shorter loan terms, etc.). The deals that generate the most lender interest have demonstrated reasonably good recovery during COVID, are in smaller markets, have diverse demand generators and can be acquired at a discount to pre-pandemic values.
I'm happy to give more specific feedback on any specific deal you are looking at.
Commercial Loan Broker · Bloomingdale, NJ · Member since 2013 · 5 posts · 4 votes
5y
It's really tough to say because all of these metrics are very deal dependent. LTV is up to 60-65% but the challenge is determining what "V" is since there have been very few data points to establish value since COVID. If they're being honest, even appraisers are telling us they don't know but are generally assuming a 25-30% discount on 2019 values.
Rate is also across the board, depending on the profile of the deal. In the past few weeks we've provided quotes from lenders for ~5% for a conservative profile all the way up to 20% for rescue capital that is a Sponsor's last resort before default.
Term depends on the lender. Right now, there are very few lenders in the market willing to do long-term loans on hotels so most of the options are 3-5 years.
Buffalo, NY · Member since 2018 · 790 posts · 530 votes
5y
I am very interested in acquiring a small hotel or boutique resort. Preferably within a 4-5 hour drive from Buffalo, NY, but I'm flexible for a great deal.
@JJ Truman I sent you a connection. @Jeffrey Pacailler do you have any clients that are just looking to get out for the cost of their mortgage? Or take on a partner that can help with cash flow until travel economy recovers?