A Stigmatized Sector - Our Outlook for U.S. Hotel Investments

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A Stigmatized Sector - Our Outlook for U.S. Hotel Investments

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William Pattison Reginald Ross, Michael Steinberg, Austin Iglehart
MAR 25, 2021

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Real Estate

Executive Summary

  • The hotel sector has been dramatically impacted by the COVID-19 pandemic and is currently in a liquidity and capital markets crunch.
  • The K-shaped economic downturn suggests leisure and transient hotel demand could recover quickly post-pandemic; summer reservation data also suggests this. Group travel, however, is likely to be slow to recover.
  • Flexible working arrangements, and the “digital nomad” workforce, is likely to boost hotel demand, helping to mitigate headwinds from virtual meetings.
  • Although the equity investment market remains relatively frozen, with wide bid-ask spreads persisting, senior and subordinate debt markets are becoming more active.