GREAT NECK, New York—The hotel acquisitions market isn’t shaping up as strongly as executives at The Dow Hotel Company thought it would this year, but the company is nonetheless pushing forward its deal efforts.
Mark Rosinsky, VP of hotel investments, said Dow is in the final stages of working out a hotel acquisition in Texas. He declined to identify the property, citing the ongoing negotiations.
Dow already has two properties in Texas in its portfolio: The Hilton San Antonio Hill Country Hotel & Spa and the Sheraton North Houston at George Bush InterContinental Airport.
With approximately 3,300 rooms and 11 hotels in its system, Dow also is likely to add one more acquisition or two this year, Rosinsky said. “It’s a long road,” he said. “Earlier this year at the beginning of Q1, we thought the number of hotels coming to market was really (going to be) quite strong.”
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| The Hilton San Antonio Hill Country Hotel and Spa. |
Usually an all-cash acquirer of hotels, Dow is seeking select-service properties. The company has properties in such U.S. regions as New York, Chicago and Southern California.
“We really don’t look by region,” Rosinsky said. “We look for good deals within major markets. Not necessarily the top five but the top 25, generally speaking.”
Most of the hotels Dow acquires require a repositioning, he added.
Rosinsky expects the deal market, however, to gather steam as 2012 wears on. He said the debt maturity issues that hotels are working through will bring more properties to the surface. As it stands now, hotel deals are a “long process” to finish.
He said the credit market is still rather tight. The availability of debt appears to be sponsor-specific, and only the well-capitalized sponsors are able to get one-off financing deals done.
Deal market
Rosinsky said hotel suitors are being drawn out by growth in hotels’ net operating income.
“In other words, increases in net operating income may well offset increases in interest rates, which after the election very well may swing higher,” he said.
Private equity firms are coming into the hotel market strongly these days. Institutional equity players also are making noise, he said.