Is It Time for Lodging REITs to Consolidate?
After surviving a tough recession, the hotel market may actually be bouncing back too fast for investors, reports Forbes. The most recent quarter saw most hotel companies exceed earnings expectations, with the lodging sector seeing roughly 32.5% total returns; however, share price performance weakened. This could be a sign that consolidation is in the lodging sector's future. Lodging analyst Rod Petrik of Stifel explains that if a disparity in valuation developed, companies with higher multiples could buy lower-multiple companies with similar business models. For example, Annapolis-based Chesapeake Lodging owns 20 properties and has a market cap of about $1.75B. It could be a target for takeover by a higher-multiple company like Bethesda-based Pebblebrook Hotel Trust. Additional takeover candidates include Hersha Hospitality, Chatham Lodging and Summit Hotel Properties; with Host Hotel & Resorts, Sunstone Hotel, Diamondrock Hospitality and RLJ Lodging listed as possible consolidators. [Forbes]