The 9 Most Important Special Requests to Make When Booking a Hotel
With that in mind, Shai Zelering, managing partner and head of hospitality investments at Brookfield, was asked how he’s thinking about hotel investment right now and whether he’s on offense, defense (or special teams).
Zelering’s answer focused on stability — and the boring.
“When you compare [hospitality’s] performance to the S&P 500 and other sectors, to me, you have to ask yourself, am I in the business of buying durability or buying hope?” he said. “As long-term investors, we look at the mispriced real estate [for] particular hotels and see incredible opportunities.
“I think that people will look back two to three years from now [and see] this as one of the best buying opportunities, as long as you're a long-term investor and you're really looking at the capability of the business,” he said, noting Brookfield would definitely be on offense.
So where would he be looking?
“I would buy those boring hotels in secondary, tertiary markets where I see really good dynamics and labor from infrastructure and manufacturing,” he said. “If you think about the investments that [the U.S.] is going to have and you think about the CHIPS Act and all this, that money hasn't even worked through the system. We're going to see, over the next 18 to 24 months, that it manifests itself in capital spending and infrastructure. The spending on manufacturing for defense is going to increase. I would look specifically at those [secondary] markets — it's not the top 10 markets because I feel that they are less business-friendly. I would buy the most boring stuff — branded, working [assets] with durable cash flow.”
Zelering was a member of the “IREFAC — The financial gurus tell it like it is” panel on the final day of ALIS by Northstar at the JW Marriott/Ritz-Carlton Los Angeles L.A. Live in Los Angeles. The panel included Larry Kwon, managing director of New York City-based Moelis & Company; Leeny Oberg, CFO and executive vice president of development for Marriott International; and Louis Sternivou, senior managing director of New York City-based Eastdil Secured. Mit Shah, CEO of Noble Investment Group, and Scott Trebilco, senior managing director of Blackstone, co-moderated the panel.
Focus on cost control
Kwon, whose company last year served as the exclusive financial advisor to Aimbridge’s $1.2 billion restructuring, was asked about the broader ecosystem of what owners and third-party managers are thinking about these days. He said the industry’s focus is often on performance, but the real story lies in costs and cash flow.
“We're obsessed with RevPAR as an industry… but really the story is around cost structure and margin and cash flow,” he said. “We can sit here and debate valuation for 45 minutes and maybe never talk about cash flow. That's just the type of world that we live in.”
Kwon said in his discussions with owners and operators, there’s a lot of talk about control.
“There's a general focus on control, what you can control and don't worry about the rest. None of us can control what's going to happen out there in the world. None of us can control the macro environment. But [we can have] a religious focus on cost structure, labor costs, labor friction cost and the hidden costs on the P&L.
“There's a lot that the management companies can do to really create discipline around that, and I know that a lot of companies that we spend time with around the third-party management space are thinking about how they can serve their clients more in the context of giving them at least visibility on cost.”
While no one can claim to have a crystal ball for what will happen to RevPAR over the next 12 months, Kwon said companies should at least have a “hazy crystal ball” for what the cost side of the P&L will look like.
“A lot of the [third-party] managers that we're spending time with are really starting to think of themselves less as hotel companies and more as professional services organizations. They are ultimately providing a service to their clients,” he said.
Calling for San Francisco
When asked what types of calls he’s fielding from buyers, Stervinou said he’s hearing a lot about a quickly recovering market where he is based.
“The call we’ve received the most is, ‘I want to participate in the San Francisco recovery.’ We didn't get those calls two years ago. Three years ago, we were begging people to actually come and visit the city, and they just didn't have time for it. Now you can underwrite high single-digit or double-digit market growth. The reason you can do that is a growing corporate market. You have a really resilient and growing group [business]. The market is supported by a mayor who will actually go to the pitch with the meeting planner and call the CEO handling the big group to secure that business, which is unheard of, right?”
Stervinou said there are a number of positive things happening in San Francisco right now (not the least of which is the Super Bowl it’s hosting in two weeks).
“We’re going to get a lot of eyes and great notoriety,” he said. “The real benefit of all this is you are buying at an extreme discount to replacement cost… So, you can buy in this market, underwrite growth, and you're buying it at a COVID discount still.”
Parting advice
Oberg was awarded the Jack A. Shaffer Financial Advisor of the Year award at the conference and will also retire from Marriott at the end of March. She was asked at the end of the session about any advice she would offer to a younger generation in the audience.
“It's probably a theme along what you've heard this morning… whether it's investors in equity markets or whatever, there is this desire that I want to wait for the bottom price, or I don't want to sell until the very top price. I think it's a mistake,” she said.
Oberg said while you have to do the fundamental research, when the general outlook has enough stability and enough positive factors, you need to move.”
“In our business, change and moving are good over the long term. I would say, don't try to perfectly time it. I mean that in your careers, I mean that in how we allocate capital. You really need to think about it over the long term.”
NATIONAL REPORT — Dallas continues to lead the U.S. in hotel construction pipeline, according to year-end data from Lodging Econometrics.
The Dallas market leads the nation's hotel construction pipeline with 193 projects and 23,720 rooms. Atlanta is second with 159 projects and 17,804 rooms, Phoenix is third with 124 projects and 16,303 rooms, Nashville is fourth with 120 projects and 15,983 rooms, and Austin is fifth with 120 projects and 14,120 rooms.
Phoenix leads the projects under construction part of the pipeline with 35 projects and 4,829 rooms, followed by Dallas with 34 projects and 3,663 rooms, New York with 29 projects and 5,689 rooms, Miami with 24 projects and 4,843 rooms and Atlanta with 21 projects and 2,206 rooms.
Dallas continues to lead with the largest number of planned construction starts in the next 12 months, with 74 projects and 8,202 rooms, with Atlanta second with 58 projects and 6,658 rooms, followed by Austin (51 projects/5,499 rooms), the Inland Empire in California (44 projects/4,467 rooms) and Nashville (42 projects/5,981 rooms).
Dallas also leads in projects in the early-planning stages with 85 projects and 11,855 rooms, followed by Atlanta (80 projects/8,940 rooms), Nashville (59 projects/7,648 rooms), the Inland Empire (59 projects/5,908 rooms) and Orlando (51 projects/10,777 rooms). These project counts underscore substantial activity in the U.S. hotel sector, particularly in the South and Southwest.
Hotel renovation and conversion activity remains steady across the U.S. through the end of the year, with prominent World Cup markets Houston and Atlanta leading with 35 projects each and 5,411 and 4,314 rooms, respectively. Washington, D.C. has 34 projects and 3,963 rooms, followed by Chicago with 29 projects and 5,397 rooms, and New York with 28 projects and 7,293 rooms.
The fourth quarter saw 285 new project announcements nationwide, with Phoenix leading with 12 projects and 1,347 rooms, followed by Atlanta (8 projects/854 rooms) and St. Louis (7 projects/725 rooms), followed by Tampa (6 projects/664 rooms) and the Inland Empire (5 projects/535 rooms).
Looking ahead to 2026, Phoenix is forecast to lead with new openings (23 hotels/3,326 rooms), followed by New York (22 hotels/3,795 rooms), Dallas (19 hotels/2,295 rooms), Austin (13 hotels/1,738 rooms), and the Inland Empire (12 hotels/1,024 rooms).
LE's extended forecast shows continued growth, with new hotels in 2027, led by Dallas with 37 new hotels and 3,198 rooms, followed by Atlanta (28 hotels/2,554 rooms), the Inland Empire (18 hotels/1,693 rooms), Phoenix (17 hotels/2,078 rooms) and Los Angeles (15 hotels/1,769 rooms).
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