Pent-up vacation demand has boosted investor demand for beach resorts and roadside hotels. That crowded wager is already pushing one investor to explore ways to bet on business travel.
Dreamscape Cos. Chief Executive Officer Eric Birnbaum said his firm, which has more than $1 billion to buy hotels, sees more opportunity to acquire lodging properties that cater to business clientele, despite corporate America’s hesitance to put workers back on the road.
“Looking out into the future, the recovery may take longer for group-focused or big-box convention hotels,” said Birnbaum, who previously co-founded Imperial Cos. with former Vornado Realty Trust CEO Michael Fascitelli. “That may be where the most unique opportunities sit.”
Dreamscape is operating in a crowded field of investors waiting for distressed hotels to hit the market. When the Covid-19 pandemic halted travel globally during the first half of last year, it was widely assumed that the shock to hotel revenue would lead to foreclosures and forced sales. It’s been a slow burn. Most lenders were willing to offer forbearance in the early days of the crisis. Emergency loans from the U.S. Small Business Administration also helped hotel owners hold onto assets.
Net asset values for hotels owned by real estate investment trusts have ticked up 4% since the end of January, due partly to “the significant amount of capital on the sidelines looking for a home,” according to Michael Bellisaro, an analyst at Robert W. Baird & Co.
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