Urban Hotel Owners May Look to Sell Over Property Upkeep, Swelling Debt
Skift Take
For hoteliers in slow-to-rebound U.S. markets, forced sales will be more likely as costs and debts rise. That's one of a few insights from the top boss of First Hospitality, which is an active owner and manager.
Early Check-In
Editor’s Note: Skift Senior Hospitality Editor Sean O’Neill brings readers exclusive reporting and insights into hotel deals and development, and how those trends are making an impact across the travel industry.The hotel sector has become more specialized. Companies increasingly focus on just one thing, whether it's ownership, operations, franchising, or third-party management. So First Hospitality stands out for its contrarian approach. It keeps a hand in almost everything.
First Hospitality's diverse business interests in the U.S. give it a broad view of hotel deals and development.
The Chicago-based company is a real estate investor with a portfolio worth "hundreds of millions of dollars."It's also a third-party operator of just over 50 hotels. It has an ownership interest in about half of those.The company — backed by Stephen L. Schwartz's family — develops hotels, too.Last year, First Hospitality signed a deal with The Georgetown Company, a real estate investor.Georgetown plans to invest upwards of $1 billion in upscale and luxury hotels. First Hospitality will manage those hotels with, or for, Georgetown.I interviewed president and CEO David Duncan for his insights.
Over his career, Duncan has coordinated more than $10 billion of real estate and capital market transactions.Duncan said many hotels' failure to maintain their properties would haunt them.
During the pandemic, capital expenditure often evaporated as owners paid debt service or distributed money to investors. The big brands have been flexible, letting owners delay spending on property improvement plans.But beat-up hotels tarnish a brand's reputation. So the big hotel groups will have to crack down on negligent owners.First Hospitality has avoided getting ove