The Real Deal Los Angeles

Marriott CEO: Expect “tens of billions in Chinese investment” in US hotels

Hospitality execs see more foreign investment, downplay Airbnb

June 06, 2016 02:00PM
By Konrad Putzier

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Arne Sorenson

From the New York website: If there’s one person who knows a thing or two about the impact of growing Chinese interest in U.S. hotels, it’s Marriott International CEO Arne Sorenson. Earlier this year, Sorenson came close to losing a bidding war over Starwood Hotels & Resorts to Chinese insurer Anbang Insurance Group – and he expects more to come.

“I’m sure we’ll see tens of billions in Chinese investment” in hotel properties and commercial real estate more broadly, Sorenson told journalists during a panel talk at the NYU Hospitality Industry Investment Conference on Monday.

He added that Chinese interest will likely focus more on hotel properties than hotel operating companies.

Christopher Nassetta, CEO of Hilton Worldwide, said he also expects more investment in U.S. hotels from the Middle East. “I think this is the peak of the iceberg,” he said. “When you wake up 10 or 20 years from now, you’ll find that a lot more assets are held by global players than today.”

Richard Solomons, CEO of InterContinental Hotels, pointed to the Japanese investment boom of the late 1980s as an example of how a spike in foreign investment can do damage if it’s short-lived. “What you don’t want is those big flows of investment coming in and going out again,” he said.

Recent Chinese buys of marquee U.S. hotels include Anbang’s $6.5 billion purchase of Strategic Hotels & Resorts, which owns the Essex House hotel on Central Park South. Last year, the company paid $1.95 billion for the Waldorf Astoria Hotel.

Foreign investment aside, the panelists did their usual routine of downplaying the impact of room listings site Airbnb on hotel companies. Sorenson argued that the site is shifting from offering mainly rooms in occupied apartments to offering vacant apartments. This, he said, makes Airbnb more similar to micro hotels.

“The more you get into micro hotels, the less disruptive it gets,” he said.