Distressed hotels could find buyers in 2010
Monday, December 21, 2009
Source: Reuters
Reuters reports: The recession-ravaged U.S. lodging industry will offer opportunities next year for would-be hotel investors interested in picking up plum properties suffering from falling revenue and high debt.
As much as $3.5 billion worth of hotels are expected to trade hands in the United States next year, compared with just $2 billion in 2009, according to projections from hotel investment firm Jones Lang LaSalle ( JLL - news - people ) Hotels.
Much of this activity will be spurred by the sale of distressed hotels struggling to fund looming debt payments as travel demand remains weak.
"When these loans come due, I think that's when you're going to see an awful lot of product in the market," said Daniel Lesser, a senior managing director of CB Richard Ellis.
Nearly 1,300 properties in the United States are classified as distressed, representing a value of more than $32 billion, according to Real Capital Analytics. That figure ticks up daily as more and more hotels buckle under the economic downturn, which has sapped travel demand.
"At some point, it's simple math," said Dan Fasulo, head of research at Real Capital. "If your income from the property (is cut) by half, there's not enough money to go around to pay the bank, to pay your staff, to pay your suppliers."
Hotel deals in the United States have been few and far between in 2009 as buyers and sellers haggled over the worth of these properties.
"There's been a huge disconnect between bid and ask," Lesser noted, adding that valuations are now not as far apart as they were 18 months ago. Many take this as a sign that transactions will pick up again in 2010.
View the full article on Reuters: Distressed hotels could find buyers in 2010
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