Private equity giant Blackstone Group partnered with Cambridge and Paulson & Company to acquire 680 Extended Stay hotels for $3.9 billion dollars out of Bankruptcy court in May. Dealogic, a platform for investment banking and capital markets professionals, said it was one of the biggest deals since the downturn, when lodging values dropped dramatically and hotel values fell 50%.
Entrepreneurs like Richard Branson are getting back into the hotel sector and industry observers are starting to think it has bottomed out and on the way back up. Mr. Branson in September announced he would create a Virgin Hotel empire. With big name entrepreneurs getting back into the sector, other investors are sure to follow.
Triago, an advisor of sellers on the secondary market, said in the last month it has executed transactions close to the NAV (net asset value), indicating sellers will not need to take the deep discounts they have been forced to accept in the past. Triago also reported that discounts on the secondary market averaged just 8%, compared to 35% in early 2009.
Dealogic reports there have so far been 77 lodging deals in the United States in 2010, valued at $77 billion, compared to just 30 deals valued at $1.2 billion for the same period in 2009. The number and value of deals in 2010 to date is better than last year, but still far short of the 141 deals valued at $42.3 billion in 2007. During this period Blackstone acquired Hilton Hotels for $26 billion.
