Hotel slump lures buyout firms

Seattle

BUYOUT firms expect that bargains may emerge in hotel investments following the slump in US lodging stocks, suggesting a potential pick-up in deals after a slow start this year.

"Market volatility creates opportunities for longer-term, value-oriented investors like ourselves," said Tyler Henritze, co-head of US real estate acquisitions for Blackstone Group LP, which raised a record US$15.8 billion property fund last year.

The private equity firm in December bought Strategic Hotels & Resorts Worldwide Inc, owner of properties including the JW Marriott Essex House in New York, Westin StFrancis in San Francisco and Four Seasons Resort in Jackson Hole, Wyoming.

The deal pace this year has been tepid as buyers and sellers assess the changing outlook and capital-market gyrations drive up borrowing costs. US hotel transactions totalling US$2.99 billion were completed till Feb 29, down from US$12.3 billion a year earlier, when Hilton Worldwide Holdings Inc sold The Waldorf Astoria in Manhattan to China's Anbang Insurance Group Co for a record US$1.95 billion, according to research fi…