Hotel real estate or operations?

Author: James Chappell, James Kirk (yBC.tv)

Categories: Deal-making, Financial, Investment
Tags: assets, Horwath HTL, owner/operator, real estate
Hotel real estate ownership has transferred over the past 25 years from brands to banks. In this TV show James Chappell discusses straddling the world of real estate owners and hotel operators.

The hotel real estate overhaul

Our clients really are the people who are involved in the owning of the real estate, that community in the industry. And so we work with banks with individual owners, with real estate investment trusts, basically anybody who owns a hotel real estate asset. I mean 20-25 years ago the real estate asset itself was owned by the brands and they went under, they went though a process of selling off the family silver if you like. They decided are we in the hotel real estate business or are we in the hotel operation business? And there was a real separation and they decided very clearly that actually, we're not real estate guys we are hotel guys, and so 20 years or so ago you had a big inflow of hotel real estate into the market, which was then snapped up by, at the time it was banks, property companies, high net worth individual's trusts that were set up specifically to deal with hotel assets. And what that did is it created a need for a level of skills that was part hotel, part real estate, and it was a skill set that really wasn't there in the marketplace before, so a lot of what Horwath HTL does is we act if you like as a translation service and we straddle both worlds between hotel real estate between the investment community and the hotel operating community, because one of the interesting things about a hotel asset is that unlike other real estate asset classes like commercial or residential or retail, the value of the underlying asset is very closely linked to the performance of the property and so it is very difficult to separate the value of the underlying hotel business from the real estate itself, so you relay need expertise in terms of how the business works, how the contracts are structured and how they work etc.

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