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Second Quarter 2020: Are All Crises the Same?

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Although the Great Recession is useful in offering insights into how hotel performance might fare during a crisis, we show that the current crisis is much worse in terms of risk and the loss of relative wealth. Not surprisingly while the price of hotels in all regions continue to exhibit negative price momentum, hotels in the Middle Atlantic and New England regions were particularly hard hit. Hotels in gateway cities experienced less price decline relative to those in non-gateway cities. Both our moving average trendlines and standardized unexpected price performance metrics indicate a hemorrhaging in the price of both large and small hotels. The cost of debt financing spiked in this quarter with financing available only on refi deals in general. The relative risk premium that lenders require for hotels over and above other commercial real estate has also increased on these refi deals. Our tea leaves suggest that both large and small hotels should continue to decline in price. This is report number 35 of the index series.

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2020-07-24

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real estate; hotels; crisis

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Government Document

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Attribution-NoDerivatives 4.0 International

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