Thomas Fisher, executive vice president with JLL Hotels, tells GlobeSt.com that both DiamondRock and Carlyle are taking advantage of the strong capital-markets environment. With corporate travel returning and the convention calendar heating up, Fisher says the market is seeing a new momentum in room occupancies.
"I've never seen so much investor interest," Fisher says. "Over the past 15 months, we've been involved in $2 billion worth of transactions. That alone is a testament to institutional quality of market."
Undoubtedly, there has been a flurry of investment activity surrounding Chicago's high-end hospitality assets. Just last week, JLL Hotels closed on the 751-room Westin Michigan Avenue for $214.7 million as well as the 367-room House of Blues Hotel for $114.5 million.
Mark Eble, vice president with Indianapolis-based PKF Consulting, a national hospitality and consultation firm, agrees that the market is ripe for activity. With demand growing at such a fast rate, hotels have been more selective about reservations. According to Eble, hotels have expressed that by raising rates, confident that customers will need to be there, displacing the more rate-sensitive clientele. This type of environment is a green light for hospitality investors, Eble says.
"This is the best time to sell a hotel that I have ever seen in my career," the 25-year veteran says. "And 2006 is going to be the year of selling, of people looking to get out. Short-term speculators and long-term holders are going to see that, if we're not at the top now, we're approaching it."
Eble also says that today's market is seeing an unusual trend with more investors and developers opting to acquire hotels rather than building from ground-up. With the rise in construction costs, the proposition to buy existing property is a better investment, especially properties that are well-established.
"The Marriott is as close to a blue-chip hotel as one can imagine; there just aren't other better locations," the PKF executive says. "DiamondRock must be looking at that as being a low-risk proposition for hotel acquisition. It's a perfect location, great sticks-and-bricks, a great brand--it's just a great property."
Neither DiamondRock nor Carlyle Group representatives could be reached for comment by press time.
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