When Hersha Hospitality Trust acquired Washington DC's St. Gregory Hotel last month for $57 million, it would have been understandable to assume the REIT wouldn't be investing much in upgrades. After all, the previous under had competed a renovation of its rooms in Fall 2014. But no -- Hersha Hospitality Trust plans to reposition the hotel’s restaurant, bar and lobby.
Ditto when DiamondRock Hospitality Co. acquired the fee simple interest in Sheraton Suites Key West for $94 million, or $511,000 per key. Key West, FL, is the highest RevRAP market in the US, CEO CEO Mark Brugger said at the time of the deal's announcement...
These two examples show the precise calculations hotels are making when it comes to renovations these days. This is not to say that in the past hotel owners scribbled back-of-the-envelop numbers to decide whether to renovate and then merrily set forth on building. It is, though, more pronounced now as the hotel industry rushes to catch up with the other asset classes that have recovered from the recession.
"This is definitely something we are seeing more of as the industry recovers from the downturn," Tom Baker, managing director of Savills Studley 's Professional Hospitality Group, tells GlobeSt.com...Room by Room, Hotel Owners Build Up RevPAR
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