According to an article in Hotel Business Magazine, Kimpton Hotels is making a big bet in what many would consider a bad market. Kimpton has raised $800 Million in funding for new projects to be invested in the next three years. The article states:
While much of the hotel investment community awaits further clarity on where true asset values currently are before making another move, Kimpton…has made a bold statement of faith in the market, the boutique sector, and more significantly, its own brand.
Indeed Kimpton’s strategy is bold. I think it also speaks to the real state of the market. Companies that are nimble such as Kimpton can benefit from the lowered asset values and expand their hotel portfolios. Kimpton CEO Michael Depatie is quoted in the article as saying,
“while there isn’t a lot of current activity, we expect that will change in the coming months. We’re very bullish.”
He continues,
“So in 2009 and 2010 there will be a moderation of new supply and if the economy comes back at that same3 time, that will bode well for asset values.”
It is as simple as buy low sell high. Kimpton is poised to take advantage of a lagging market and, what’s more important, they have the confidence in the resurgence of the market to do so. Further elaborating on how the company is approaching this, Joseph Long, Executive VP of Acquisition said,
“No one knows where the market is on the downward scale and whether it’s down 20%, 30% or 50%. And there is a dearth of deals getting done because the values are not being validated due to the lack of financing. But at some point that will change and it may be in about six months.”
I like Kimpton’s confidence in both their brand and the status of the market. In an era of negative media about the economic outlook it is good to see a company with a lot at stake taking risks to further their brand and their market position.
Been out of town as of late and just looking for the latest and greatest.