NEW YORK CITY — The U.S. market still presents huge opportunities to hospitality investors, but it is worth looking beyond its borders, according to an expert panel speaking on Tuesday at the NYU hospitality Industry Investment Conference in New York.
“Today I came back to realizing that the structural advantages we have in the U.S. are so great," said Eric Resnick, CEO of KSL Capital Partners. "I still think this is by far the best market to invest in in the world, it’s the deepest and most robust.
“I see a lot of growth in our U.S. businesses. Maybe it will tilt a little more towards Europe and Asia but North America is where it’s at. Not because we don’t see opportunities globally - but there are more friction costs to getting things done beyond the U.S. borders.”
Earnings Differential
Kevin Jacobs, chief financial officer and president, global development at Hilton added: “Around 80 percent of our rooms under construction are outside the U.S., but it’s going to take a long time before we are at fifty-fifty outside the U.S. in terms of earnings.
“By the way, we are still growing in the U.S. – it’s still the best and most transparent country in which to operate with the best rule of law. But we are also active in 126 countries, with 35 new countries in the pipeline - that’s probably the most that you can be in.
“Globally, the middle class has doubled in the past two decades and will probably double again. RevPAR premiums are bigger outside the U.S. than in the U.S. We are not the only ones that have figured that out, but if we can win a bigger piece of the pie it will work in our favor.”
Noted Shai Zelering, a managing partner in Brookfield’s real estate group: “For us, in the last two years we’ve had about 60 percent business in the U.S., and 40 percent abroad. We are going to flip that.
“The growth that we are seeing in India is fantastic, while the institutionalization of hotels in Southern Europe is something else we are focused on. We have had great success with Center Parcs in the UK. With certain businesses you are going to create growth over time – and they are going to get better and better.”
Loan Book
Added Jeff Horowitz, global head of real estate, gaming & lodging, Bank of America: “Our business is generally 65-70 percent, U.S., and a third outside. This year it was 90 percent in the U.S. Our loan book is skewed here.
“A lot of the transactions tend to occur here or are by companies that are based here. There are also considerable capital flows from elsewhere, and that will continue to grow – which says that at some point, the investments will be there as well – but it’s slow. Here the transactions happen faster, there is more churn. I think over time, the business will stay U.S. centric - but perhaps not the capital.”
Mit Shah, CEO, Noble Investment Group, concluded: “This is a fantastic business. Many of us have gone through multiple cycles, from the global financial crisis to the Zika virus, Covid to geopolitical issues. Throughout all those things that have taken place the industry has come back stronger, and it will continue to do so because there are organizations and brands that are building great platforms.”