Hotel REITs: Winter Is Coming, So Is Airbnb
It was poised to be a dark winter for the hotel industry, which has experienced a "double-dip" in occupancy over the last month amid the "second wave" of the outbreak.
Vaccine Hope: The faster-than-expected approval of a coronavirus vaccine has thrown a much-needed lifeline to the struggling Hotel REIT sector, which has surged more than 50% over the last quarter.
Too far too fast? After this vaccine-driven rebound, hotel REITs are no longer "cheap." In fact, hotels are now the most expensive property sector based on consensus 2021 FFO multiples.
Every hotel REIT slashed its dividend and it may take a half-decade or longer to return to pre-pandemic levels. Suburban-focused and leisure-oriented properties will bounce far faster than urban business-focused hotels.
Airbnb's market value is on par with the entire hotel industry combined following its stunning IPO. Short-term home rentals affect urban hotels most acutely, representing a source of "liquid supply" that compromise pricing power on critical compression nights.
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