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Private Ownership Best For Hotel Chains?
Jack Corgel, the Robert C. Baker Professor of Real Estate at the Cornell School of Hotel Administration, finds that private equity has several advantages over public companies in ownership of hotel companies.
Among them, he finds that private equity firms have had more consistent access to capital than have public firms during recent years, while at the same time, publicly held real estate assets tend to be undervalued by the market.
In addition, private firms do not face the quarterly pressures or regulatory requirements that burden public companies, he argues.
“Private firms have been able to realize considerable return from their [hotel company] purchases,” Corgel says. “Blackstone, for instance, repackaged and sold Prime Hospitality’s AmeriSuites chain to Hyatt. I cannot see how two public companies could have completed this transaction in the way that it worked for Blackstone and Hyatt.”
Although financing is scarce for now thanks to the credit crunch, Corgel believes the hotel industry will continue to privatize when normal market conditions resume, even with nearly 80% of hotels already in private hands.
Click here to read more of his argument on why private ownership is the best fit for hotel companies.
Private Ownership Best For Hotel Chains?
June 24, 2008
Jack Corgel, the Robert C. Baker Professor of Real Estate at the Cornell School of Hotel Administration, finds that private equity has several advantages over public companies in ownership of hotel companies. Among them, he finds that private equity firms have had more consistent access to capital than have public firms during recent years, while at the same time, publicly held real estate assets tend to be undervalued by the market.
In addition, private firms do not face the quarterly pressures or regulatory requirements that burden public companies, he argues.
“Private firms have been able to realize considerable return from their [hotel company] purchases,” Corgel says. “Blackstone, for instance, repackaged and sold Prime Hospitality’s AmeriSuites chain to Hyatt. I cannot see how two public companies could have completed this transaction in the way that it worked for Blackstone and Hyatt.”
Although financing is scarce for now thanks to the credit crunch, Corgel believes the hotel industry will continue to privatize when normal market conditions resume, even with nearly 80% of hotels already in private hands.
Click here to read more of his argument on why private ownership is the best fit for hotel companies.
Posted by Derek Gale on June 24, 2008 | Comments (0)
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