It Could Take Years for Hotel Assets to Recover

While some assets are poised for a swift recovery—like the industrial market— hotel assets won’t recover until 2024, according to hotel contractor R.D. Olson Construction. The company predicts that growth won’t reach prior peak activity for the next five years. The forecast highlights the significant damage to the travel and tourism industry.

“It’s quite hard to get a pulse on the level of devastation that the hotel industry will undergo, as things continue to change daily and we don’t know when it will end. However, the forecast currently discussed is that we probably won’t experience the same growth and progress in hotel construction and development or return on property values as we did pre-coronavirus until 2024,” Bill Wilhelm, president of R.D. Olson Construction, tells GlobeSt.com.

Opportunistic investors are already searching the market looking for deals—even with the heightened uncertainty. While hotels are among the hardest hit asset classes, Wilhelm says there potential for the right investors to capitalize. “When there’s an impact of this caliber on the economy, there’s always the potential to find, create and capitalize on opportunities,” he says. “While this pandemic will have a direct and lasting impact on the hospitality sector, there are also opportunities to consider.”

Construction costs are expected to fall significantly, and land prices could also recalibrate. That will create opportunity in new hotel construction. “On the construction side, I anticipate that we will see improvement in construction and development costs,” says Wilhelm. “I also believe that many businesses in this industry, from builders and developers to operators and investors, will come out of this situation stronger, smarter and more forward thinking than ever before.”

Ultimately, hotel developers and contractors will have to adjust they way they do business, both in the short-term and long-term. It is an opportunity for creative companies to thrive. “We will look at our companies differently as well as the way we operate and service our clients,” says Wilhelm. “For R.D. Olson Construction, I think this situation has further tested and encouraged our ability to think outside of the box, try new things and find innovative solutions to construction challenges that we will continue to apply well beyond this pandemic.”