Blackstone, Apollo, Starwood Capital, and Oaktree have acquired a serious number of hotels. That’s not something we’re unaware of, but according to this report from Forbes.com, private equity firms are the largest and most acquisitive group of hotel buyers in the U.S. accounting for a buyer share of 37 percent in 2013.
Ten years ago, the numbers were flipped in favor of REITs, with PE firms owning just 12 percent of hotel rooms. Today, PE firms own 59 percent of hotel rooms while REITs now own just 33 percent.
According to the Forbes article, PE firms have more buying power and lower risk in volatile environments, and most PE firms enjoy being hands-on owners that can invest in properties even in difficult economic situations.
“Private equity firms tend to acquire assets that have value-add opportunities and show promise for upside potential,” Lauro Ferroni, director of hotels research at Jones Lang LaSalle in Chicago, told Forbes. “They can come in and identify underutilized space, like a rooftop or a shuttered meeting room, that isn’t maximized to its full potential and turn it into a money-making [restaurant].”
More at Forbes.com.