Blackstone Inc. big announcement last week that he was selling his Cosmopolitan of Las Vegas complex and casino for $ 5.65 billion, a price almost $ 4 billion more than he paid back in 2014– was the latest signal that investors are confident that the future of the hotel industry remains bright despite the massive blows the industry has suffered from the pandemic.

“The sale is possibly the most profitable sale of a single accommodation establishment ever,” says Jan Freitag, senior vice president of accommodation information for STR and national director of hotel analysis for the CoStar Group .

It’s just the latest offering in the full service industry (hotels with restaurant and meeting space in preferred destinations for business travelers and conference attendees). The iconic Venetian Casino and the Sands Expo and Convention Center also announced its sale of $ 6.25 billion in March 2021.

These properties are trading at high prices as investors look past below-average occupancy rates in the United States, betting these hotels will fill up with guests again as the recovery from the pandemic continues.

“They are long-term investors with long-term horizons,” says Freitag.

Investors spent $ 1.0 billion to buy full-service hotels in August 2021. That’s more than four times (a 442% increase) the amount they spent the previous year, at its peak pandemic, according to data from New York-based Real Capital Analytics (RCA).

The amount of money spent by investors to purchase these hotels gradually returned to a healthy level during 2021. In the first eight months of 2021, investors spent $ 11.1 billion on full-service hotels , more than double (a 244% increase) from the same eight-month period the year before, according to RCA.

Prices for these properties have remained high, especially compared to the revenue generated by hotels, which still suffer from many empty rooms and quiet meeting spaces as the Delta variant of the coronavirus continues to spread in parts of the states. -United.

“Values ​​are holding up because owners are bullish on the recovery, although I think there is currently a large supply-demand gap for full-service assets,” said Amit Govin, director and CEO of Everwood Hospitality Partners, based in New York. “We have not seen a significant discount in asking prices compared to what we experienced before the pandemic.”

Fundamentals still approximate for congress and convention hotels

Full-service, “upscale” hotels that serve large numbers of conference and convention attendees still had plenty of empty rooms this summer. As of August 2021, only 55.6% of those rooms were occupied, according to STR. That’s a far cry from a healthy occupancy rate, although it’s a big improvement over the first eight months of 2021, when on average 47.1% of those rooms were occupied.

“You can argue that we are in the middle of a recovery that started after April 2021,” Freitag said.

Many other types of hotels recover from the pandemic much faster, especially limited-service hotels located in vacation destinations. On average, across all hotel types, 63.2% of rooms were occupied in August 2021, compared to 57.1% on average in the first eight months of 2021, according to STR.

Economists also measure the loss of revenue at conference and convention hotels in terms of pooled sales of hotel rooms, when more than 10 rooms are booked at a time, often for conference attendees. Group sales totaled around 3.8 million room nights per month in July and August 2021. This is a huge improvement from just 840,000 room nights purchased in group sales in July 2020 and 1.2 million in August. 2020. But it is still far from the healthy level. more than six million overnight stays sold in group sales per month in July and August 2019.

Of these bundles of hotel rooms, relatively few were purchased for conference attendees.

“On the weekends there are a lot of group requests for vacationers attending weddings and family reunions,” says Freitag. “What is missing are Tuesday and Wednesday stays for people attending citywide conventions.”

Investors don’t seem to be worried, although demand is still dire for conference and convention hotels. “For the record… the negotiations for upscale hotels all start with the 2019 results,” explains Freitag. “They omit 2020 and 2021 as negative outliers.”

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