February 22, 2007

Private-equity buyouts in the hotel industry

Private-equity buyouts in the global hotel industry are on the rise. In many cases private-equity funds are interested in hotel real estate as a financial asset, and are not interested in running a hotel business. This has led to significant changes in the priorities and goals of hotel management. These changes are based on financial targets that include extraordinarily high rates of return to shareholders (15-20%), financing new hotel properties through debt rather than re-investing profits and the rapid acquisition and liquidation of hotel properties as ‘real estate assets’.

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