Hotels Turn in Strong Performance

NEW YORK CITY-As REITs meet Main Street, hotel leaders see the sector’s upswing continuing over the next 24 to 36 months; however, they do not expect more hotel players to jump into the REIT swimming pool anytime soon.

Speaking at NYU’s 27th Annual International Hospitality Industry Investment Conference yesterday, Lou Plasencia punctuated the sector’s strong performance with figures putting its average annual growth at 22.9% in 2004 and average annual REIT return at 18% from 2000 to 2004. And with numbers like that, hotel REIT executives said, given the opportunity, they would do it all again. “Our original reason for going public was to have access to the public markets,” explained Tom Corcoran, president and CEO of FelCor Lodging Trust. “It is a very efficient way to own hotel real estate.” He added that he would not consider “de-REITing.”

But despite the upside to hotel REITs, Doug Kessler, COO and head of acquisitions at Ashford Hospitality Trust Inc., said he is not aware of any companies with plans to go public, adding that DiamondRock Hospitality–which began operations in July 2004 and become a public reporting company last month–may be the last for some time.