DISTRESSED ASSETS- HOSPITALITY'S NEW ALBATROSS

More than 25 to 30% of assets are likely to become distressed as the industry struggles with a collective outstanding debt of Rs 50,000 crore and no debt restructuring measures in sight. How will the industry cope?

- DEEPALI NANDWANI

Across the world, distressed hotels are creating new opportunities for keen-eyed investors. The signs are visible globally. In Thailand, Destination Capital, a Bangkok-based private equity real estate investment and asset management company, is set to join forces with its capital partners to acquire hotel assets in the Asia Pacific region.

They are drawing up a game plan of acquiring strategic hotel assets and adding value through renovation, asset management, and rebranding with a global hotel brand to boost financial returns.

In the US, it is being estimated that 20 % of hotels have debt held in commercial mortgage-backed securities (CMBS). Blackstone, one of the world’s largest real estate investors, is said to be scouting for struggling hotel properties for investments, globally. After raising $20 billion during the second quarter, Blackstone now has a record $156 billion in “dry powder” capital to deploy for investments.

Internationally, Accor has confirmed it was closing in on a deal to take over the contracts of about 100 Travelodge hotels after an ongoing dispute over rent payments at the budget group. “The deal would involve Accor taking a 10% stake in a new special purpose vehicle that would be majority-owned by the Travelodge landlords. The vehicle, to be named Ago, would issue new 25-year leases to the hotel owners, who would pay franchise fees to Accor for use of its Ibis brand,” reported the Financial Times.

India’s distressed hotel landscape