Author of www.HotelLawBlog.com
4 March 2007
Hotel lawyer on hotel and hotel mixed-use development. Wasn’t it only “yesterday” that a few hundred million dollars seemed like a lot of money and made the headlines? After Blackstone’s $39 billion purchase of Equity Office Properties deal was topped in deal size by Kohlberg Kravis Roberts’ bid for Texas Pacific Group (TXU) for about $45 billion, it almost seems like everyone yawns at “mere” billion dollar deals, much less something smaller. For example, did you notice any major headlines in the past couple of weeks about Winston Hotels being bought by Wilbur Investment for $850 million, or Apple Hospitality being bought by ING Clarion Partners for $890 million, or Hilton selling its Scandic Hotel chain to a private equity group for about $1.1 billion?
Nobody I know was particularly excited about these deals despite their size, which would have claimed headlines only a year ago. As I have commented before on www.HotelLawBlog.com, it really does seem that “Size no longer matters . . . at least in the hotel industry.”
But what does the big dollar focus on hospitality mean from private equity and celebrities– as we have discussed with such players as Bill Gates and Prince Al Waleed, Blackstone, Morgan Stanley in its acquisition of CNL Hotels & Resorts, Barry Sternlicht on his investments in China and India, as well as his launch of new brands such as the “1” and the Crillon, Paul Allen, Shaquille O’Neal, Donald Trump, Magic Johnson, Andre Agassi and Seffi Graf?
By themselves, these events show that smart money has tremendous confidence in the U.S. economy and in the lodging sector. They also validate the industry metrics of sustained profits and continued good times for at least several more years. But, combined with a few other factors, they also reaffirm the general belief that this is a great time to be developing hotels — particularly in a hotel mixed-use context — if it is done well. Let’s take a look at this and consider if we can get it right this time!
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