Takeaways from the Hospitality Capital Markets Webinar

H&LA associate Adam Zarczynski attended the webinar on hospitality capital markets hosted by Cornell. Below are some of the highlights that were discussed:

  • The Bank of America representative believes we are at the beginning of the fallout from COVID-19. He highlighted that debt service paid in April was not impacted as heavily since March was still decent month for performance. May was worse and will continue to get worse as 50% of tenants have asked for rent relief.
  • CBRE is projecting that RevPAR recovery to 2019 levels will not occur until 2023 with many hotels currently running a deficit prior to debt-service.
  • Hotels are seeing issues with reopening due to their staff members on unemployment. In some cases, workers are making more money on unemployment and it’s difficult for hotels to find enough staff to reopen.
  • It is expected governments will discount valuations of properties for next year and there will be a high number of grievances.
  • The representative from Acore Capital discussed demand levels will not recover to 2019 levels until 2023 with RevPAR not recovering to those levels until 2024.
  • As many of us have seen, sellers are unwilling to take big discounts right now on their properties. But some buyers are looking for discounts as high as 40%. This has put the transaction market mostly at a standstill.
  • Everyone agreed leisure travel will be the first to come back with many families wanting to take a vacation. They all agreed convention business will take a long time to come back and even corporate meetings will be slow to come back as many companies will not want to take on the liability of bringing many of their employees together from various parts of the country.
  • Hotel construction will be significantly lower than it has been in recent years and many hotels will not reopen.
  • Leisure travel will benefit from very low rates being offered initially to entice people to travel.
  • The representatives see better recovery for select-service hotels and believe there will be operational changes that include very limited front desk staffing and a reduction in housekeeping services.