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Private real estate firm The Georgetown Co. is betting beaucoup bucks that travel will eventually come roaring back, creating a new platform to direct $1B toward investing in upscale and luxury hospitality properties across the country.
The New York City-based firm is joining with hotel management and development company First Hospitality for the venture, the company announced Tuesday. Georgetown is also taking an ownership stake in First Hospitality, per the release.
“We are very bullish on the travel sector overall, pre-pandemic we would say for sure we were in a golden age for travel, people around the world are looking for experiences and moments over possessions,” Michael Fishbin, Georgetown’s managing director and head of hospitality, said in an interview.
Fishbin joined the firm in February 2020 to grow the company’s hotel holdings. He and First Hospitality CEO David Duncan will lead the new platform. Fishbin said the firm has one deal under contract that is set to close within 30 days, and several others in advanced negotiations, though he declined to provide specifics on the transactions.
He said the target is properties priced between $25M and $100M, and largely hotels with between 150 and 400 rooms. He said the company is interested in gateway markets, but is also looking at “active growth markets” in the Southeast. He said properties that could benefit from renovation are considered attractive.
First Hospitality is active in 11 states, Fishbin said. Georgetown, which owns four hotels as part of a mixed-use project in Columbus, Ohio, is planning a 1.1M SF, 25-story office tower near Hudson Yards and in March announced a new research facility anchored by Mount Sinai’s Icahn School of Medicine on 11th Avenue.
"The pandemic created significant disruption, and the travel sector … [but] we don’t expect there will be fire sales,” Fishbin said, though he said he expects it could be three to four years before hotel occupancy returns to its 2019 levels.
He expects “bleisure travel” — the blending of business and leisure travel — will gain steam, too, particularly as employees may work remotely more often.
“We think of hotels as a bit of a base camp where you can work, play and use the amenities of the hotel for multiple purposes," Fishbin said. "This, as part of this work-from-anywhere trend, could be a beneficiary of some of these dynamics.”
In places like New York City, the hotel and hospitality sector have been hit hard by the coronavirus pandemic and ongoing travel restrictions. In Manhattan, in the first half of this year, revenue per available room was up sharply from 2020, but down 65% from the same period of 2019, according to PwC’s Manhattan Lodging Index.
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