The year 2020 has managed to devastate the global economy, and as a result, US GDP in the second quarter declined by almost 33% year-on-year, the most significant quarterly decline observed since the 1940’s.
The stock market has rebounded considerably from its lows, reflecting an optimistic view of an economic recovery, but it is likely to be slow and very bumpy.
Hotels have been one of the hardest hit sectors, and many anticipate deep distress will produce increasing levels of loan defaults for some time.
The LW Hospitality Advisors (LWHA) Q2 2020 Major US Hotel Sales Survey shows trades decreasing by approximately 83% compared with 2019, total dollar volume declined roughly 91% and sales price per room dropped by 41%.
America’s hotel industry has a proven track record of resiliency, and over the long-term, commercial real estate and particularly hotels offer superior risk adjusted yields compared with other investment classes.