To my fellow Hotel friends
Hang in there. We are in this together. It has hit rock bottom for us. Thankfully I am at a large capitalized shop. Capital calls incoming already.
It’s brutal right now. Would love to hear from other hospitality guys.
My last 3 months: - graduate MSRE program in december - take trip to europe, ending in italy - italy gets first COVID-19 case two weeks later - come back and accept a position in acquisitions at a hospitality firm - week later WHO announces this is a pandemic and Trump declares a state of emergency - hotel industry takes the biggest downfall it's ever seen
hell of an intro to the business
You have to understand why this will be worse. Buyers were compressing cap rates further on hotels as they got pushed out of multifamily and other lower cap investments. This caused a rush to hotels, which made cap rates less attractive for the amount of risk. This is deadly now as investors never fully priced in this risk. They were probably expecting risk as maybe seeing flat ADR and occupancy or maybe a 2% decline, not a 80% decline. If this lasts for two months, I think the bigger shops will have to sell for fire sale prices to survive.
Last week I wasn't as worried, but I'm starting to think I'll be layed off if firings begin, mainly because I was the last in on my team. This will really come down to the going concern of the company - as a newer luxury brand the long term sentiment will be key for my team (development) as many of our projects are years away from opening. We are still in multiple active discussions, particularly outside of the US. Within the US, things are far more quiet/dead. Our occupancy in major cities is single digits, samer as all other luxury brands. From my CEOs position I see him asking the question - if we are to keep going, do I need the entire dev team to keep things moving or will half of it suffice in the near term? Time will tell. Trump talk of ending shutdown earlier than has been initally suggested might be the final straw that determines the fate for many of us - I feel like our leadership, and likely most of hotel leadership, is in a wait and see mode for the next week, maybe two, before making such major decisions. The best silver lining for us younger folks on the board - we'll never have to hear the older guys hang the "you haven't even been through a downturn" cloud over us ever again. Hang in there - either way will be a hell of a battle story for all of us.