First Hospitality, Georgetown Co. to Target $1B in Luxury Hotels

Investors can’t wait for pandemic fears to fully pass and luxury travel continues so they are looking for opportunities in the hospitality space today, knowing what’s ahead.

Hotel management and development company First Hospitality and The Georgetown Co., a developer and owner of commercial, retail and mixed-use properties nationwide, announced a new platform targeting $1 billion of investment in upscale and luxury hospitality properties nationwide.

“We know that hospitality assets will inevitably see a strong rebound in the years following the pandemic, ultimately creating significant value for investors,” Adam Flatto, CEO of The Georgetown Co., said in prepared remarks. 

The new platform is led by David Duncan, president & CEO of First Hospitality,  and Michael Fishbin, who joined Georgetown as managing director and head of hospitality in February 2020 to grow the company’s hotel development and acquisition portfolio prior to the onset of the pandemic. With 35 years in the industry, including serving as EY’s Global and Americas Hospitality Leader for more than 12 years, Fishbin has served as an advisor on more than $30 billion of hospitality transactions over the course of his career.

“We have been planning on growing our hospitality portfolio even before COVID because there is significant long-term value in these assets,” Fishbin said in prepared remarks. “The opportunity now is even greater than before, especially by combining our own capabilities with the hotel management expertise of First Hospitality.”

JLL Hotels: It’s Easier to Build Occupancy Than Rate

Tony Muscio, Executive Vice President, JLL Hotels, tells GlobeSt, “The luxury segment remains strong for the top-rated hotels and resorts in leisure-oriented markets. We have seen luxury hotel operators focus on ADR coming out of the pandemic as it is easier to build occupancy compared to rate.

“In some instances, luxury, drive-to resorts have a higher performance in 2021 compared to 2019 given pent-up demand. This highlights the price inelasticity for the top luxury hotels. We also saw that luxury hotels who sacrificed occupancy to maintain rate during the Great Recession were more successful and faster in recovering their top and bottom lines. 

“It boils down to giving consumers what they want while taking advantage of the high barriers-to-entry and replacement cost comparisons for these luxury assets.”

Georgetown to Direct $1 Billion Toward Hotels

While the industry has begun to recover from the pandemic, Georgetown and First Hospitality believe there is significant long-term growth potential for the industry moving into 2022 and beyond. In partnership with First Hospitality, Georgetown and its longstanding capital partners will direct $1 billion towards hotel investments and properties in areas throughout the United States.

The Georgetown Company will also take a significant ownership interest in First Hospitality alongside Stephen L. Schwartz and the Schwartz family. Schwartz, First Hospitality’s founder, will continue as Chairman, and his family will maintain long term strategic control of the 35-year-old company. First Hospitality’s existing leadership team, headed by Duncan, will continue to run day-to-day operations of the company.