In a recent article for Private Equity Real Estate (PERE), Todd Soloway, Chair of Pryor Cashman's Hotel + Hospitality Group, discussed why private equity real estate investors should consider the market impact of home-sharing platforms.
(Excerpts from original article published on April 5, 2018)
Airbnb, VRBO, Homeaway, Tripping.com, Homestay and Wimdu: the proliferation of home-sharing services is undeniable. Airbnb alone proclaims itself to be present in 191 countries with an excess of four million listings worldwide – more than the top five hotel brands combined. Recent estimates assume home-sharing will reach about 155 million room nights in the US in 2018.
The impact on the hotel industry is real. In high-density cities, compression – a common industry measure of demand driving rates – is elusive. Now add to the mix extensive hotel development across major markets, plus high-cost union expenses that show no signs of abating. Just last year, the Standard Hotel in New York City sold for over $50 million less than it went into contract for in 2014, and the James Hotel sold for $20 million less than it sold for in 2013.
Whether these prices are reflective, in part, of the evolution of home-sharing services is subject to debate. But any private real estate investor evaluating an investment in hospitality assets has to ask the question: 'Is this the new reality or is this temporary?'
Click here to view Soloway's full article (see page 42).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
