The hotel industry always has been highly correlated to the economy, so it was no surprise that the industry went into a tailspin following the global financial crisis in the fall of 2008. It also was not surprising that institutional investors immediately identified an opportunity to take advantage of the distress in hotels.

That opportunity did not fully materialize, and new capital formations struggled to put their money to work. The opportunity was much more complex than conventional wisdom realized, and only time would untangle the situation created by years of massive capital inflows and undisciplined investing. Hotel lenders and investors with exposure pre–global financial crisis have been in a fog and opted to avoid Armageddon by extending loans and waiting for the fog to lift. Thoughtful investors should avoid the noise of the headlines and seize the opportunity for value creation in hotels that now lies before us.

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