Hotel Ownership / Development

There is a dearth of discussions on this board of opportunities in hotels so thought I'd start one. For someone who may want to one day acquire existing assets and also develop new ones what are some good firms to target to build up experience (either post undergrad or post MBA)?

Would it be smart to target REPE firms like Starwood Capital / Blackstone RE, HMCs like Hersha / JHM, or the corporates like Marriott and Wyndam?

What type of firm would yield the best experience for someone who wants to assemble a portfolio of hotels? In the beginning there would be a lot of operating involved but over time it becomes more about raising capital, sourcing opportuniities, and higher-level management.

Comments (19)

Aug 21, 2013

Cornell has a top notch hotel program. You have to be careful with PE, some of them are big on real estate, but they might not have a huge hotel portfolio. Blackstone owns Extended Stay, which it plans to IPO soon. I believe they also own La Quinta too. Your best shot would be to aim for a hotel REIT or developer so you don't have to deal with office and multifamily properties. The hotel business is extremely capital intensive. You will need a lot of money. It's also incredibly difficult to raise money unless you have a proven track record with decades of experience and connections.

Aug 21, 2013

I've noticed that the hotel business is incredibly niche, even among the real estate groups. There seem to be endless multifamily groups and jobs and many office and retail groups and jobs, but the jobs in hotel development and finance seem to be few and far between.

Aug 25, 2013

more please

Best Response
Dec 23, 2013

For those who want to get into investing/developing/owning hotels, the best way is to know those who are already doing that. Hotels are usually independently owned by private investors/families, unless the properties are part of an investment portfolio of a REIT, REPE fund, finds of institutional investors etc. Companies like IHG or Marriott are asset light because for decades they have shifted their business model to focus on brand development and management (royalty fees etc). That allows them to take on less risk financially when there is an economic downturn. Although there are still some hotel corporates that own assets, it has become a decreasing trend (with the few exceptions like Accor hotels who has recently restructured the company to acquire more assets). If you look at Marriott or Hilton, the properties they own vs the properties managed are a very small percentage, and I'm sure they would probably want to dispose those assets when the timing is best (unless they could be one of those golden properties with prime location in Times Square or some other location of that caliber).

To gain the most effective knowledge to one day acquire existing assets or develop new hotels, it is best to work for or with these private investors. For those people who are on the outside, the next best option would be to gain experience at hotel REITs or the Asset Management/acquisition side of hotel corporations (Starwood Capital, franchise sales and development of IHG, Marriott, Hilton, Choice etc). As someone who grew up in this industry, it is rare to meet people who come from families that own hotels unless you are part of a hotel owner's association or the like. Even when an outsider asks about what you do and you say you're in the hotel business, the almost always immediate assumption they have is that you basically stand at the hotel reception and check in guests. The general population is unfamiliar with the complexity of the hotel business and that the finance/real estate side of hotels itself already consists of many niches.

Hotels are half business and half real estate, making the industry very specialized and different from any other type of real estate. To show you just how complex hotel investments are, hotel properties have the highest overall cap rates compared to other types of income producing real estate.

Not many can become involved in hotel ownership/development but when you are playing with hotels long enough, you will realize that owning and developing hotels are more fun than banking and both the personal and financial rewards can be just sweet if not sweeter. Obviously it is important to understand the operating side of things so you're not being fooled by your managers, but hotel investment/development is a capital intensive game and the asset management is just as important than the operating numbers if you want to do things right and grow most efficiently.

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Jan 3, 2014

it is rare to meet people who come from families

Jan 5, 2014
TeddyTheBear:

it is rare to meet people who come from families

Not sure what that means...

Dec 24, 2013

Great insights, hotelmaverick. Any thoughts on some of the best companies to work for with a presence in NYC? More specifically, a company with opportunities in acquisitions/development for relatively junior professionals (3-5 years out of undergrad).

Also, as a sidenote, what are your thoughts on Hersha and JHM, respectively?

Dec 24, 2013

Darkstar:

If you have already completed your undergraduate degree, I suggest completing some certificates through Cornell's hospitality school. No groups that deal with hospitality will hire someone without decent knowledge of hospitality.

After that, I suggest checking out CBRE's and JLL's hospitality brokerage. Great money and experience at either.

Dec 25, 2013

What are one's exit opportunities after working for a very professional respected group like Starwood assuming one would ever want to exit such a strong company. Perhaps a Hotel development consultant?

Dec 25, 2013

Great feedback, Maverick. Completely agree that hotels are highly specialized and more complex than other RE asset classes. The best hotel real estate finance talent is found at hotel REITs and owner/operators. There are some hotel companies in NYC but DC is really the hot bed for this niche.

Dec 25, 2013

Also worth mentioning...this area is a little more difficult to break into. Very good old boys club but networking like crazy should help. So will having a target school education/MBA/MSRE, sorry to state the obvious.

Dec 25, 2013

Thanks for the contributions everyone.

As per my background specifically, I graduated from a "lower ivy" in 2010 and have since worked in consulting and corp dev for a top financial services company. In terms of hospitality experience, my family has a small hotel in upstate NY and I worked there from age 13-18. I also have some exposure to acquisitions side of a larger hotel portfolio (20+) but nothing in an official capacity.

I'm going to be starting bschool at H/S/W next fall and looking to do an internship with a hotel company (preferably in NYC) before going to gain more experience and also inform what type of role I might want to target during my summer internship. Anyone have specific recommendations on some companies to look into / start conversations with?

Dec 27, 2013

I would be interested in the answer to Dark's question as well. Bump.

Dec 28, 2013

Why NYC? DC is home to most of the big time hotel REITs...

Dec 28, 2013

I currently live in NYC and would like to stay here until I leave for bschool

Jan 1, 2014

Bump, anyone have any suggestions?

Also, happy new year everyone

Jan 6, 2014

Sorry I was trying to quote hotelmaverick.

"it is rare to meet people that come from families"

I disagree with this. The majority of the hotel business is not run by large corporations, but by multiple generations of families. Even some of the publicly traded big guys like Hersha are family run. I know this from personal experience since I worked on the development side in an advisory role. I could not tell you the countless number of times I saw fathers and sons working together. Also for some other reason alot of Indian families are in the business as well. Not sure why this is the case, I guess its like Koreans to drycleaner businesses.

Jan 8, 2014
TeddyTheBear:

Sorry I was trying to quote hotelmaverick.

"it is rare to meet people that come from families"

I disagree with this. The majority of the hotel business is not run by large corporations, but by multiple generations of families. Even some of the publicly traded big guys like Hersha are family run. I know this from personal experience since I worked on the development side in an advisory role. I could not tell you the countless number of times I saw fathers and sons working together. Also for some other reason alot of Indian families are in the business as well. Not sure why this is the case, I guess its like Koreans to drycleaner businesses.

I think he was merely pointing out that it's hard to track down, discover, or, most importantly, get a job with one of those families as an outsider vs getting ushered by your career services into the hands of a recruiter for a more formalized training program at, sat, a hotel REIT.

Jan 9, 2014
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