Hotel property values might now truly recover until 2024, according to a Bloomberg report. Hospitality property values are forecast to see swift improvements after 2022, though a full rebound across segments is years away, according to real estate data firm CoStar Group. Valuations tied to defaults or CMBS fell more than 20% last year from origination appraisals.
“This time around, economy and midscale properties, as well as extended-stay hotels weathered the downturn better than luxury and full-service hotels,” Xiaojing Li, managing director at CoStar Risk Analytics, told Bloomberg. “The opposite was true during the Great Financial Crisis, where the economy hotels performed worse.”
Li said distressed hotel sales should arrive soon, likely starting with tourism-reliant New York City.
At the same time, CoStar predicts distressed hotel asset values will recover at least 50% of their recent losses by 2023, and be back to pre-pandemic valuation levels by 2024.
The downturn pushed about US$146 billion of commercial real estate into a serious risk of bankruptcy or default at the end of last year, more so among hotels and retail, according to data compiled by Real Capital Analytics, a commercial real estate data firm.