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Hotel Acquisition Opportunities Picking Up

12/14/2010 | By Allen Kenney

The last year in the hotel sector has witnessed consistent increases in the number of distressed assets coming to market, according to Jon Bortz, chairman, president and CEO of Pebblebrook Hotel Trust (NYSE: PEB).

Bortz spoke with during REITWorld 2010: NAREIT's Annual Convention for All Things REIT in New York City in November. As a veteran of the hotel industry, Bortz called the recent slump "by far the worst" in his career.

"When we look back at the events surrounding Sept. 11, 2001, and the recession that came along with it, we thought that was about as bad as it could get," he said. "We were wrong. It's worse now."

Pebblebrook priced its initial public offering in December 2009 in an effort to take advantage of the dislocations in the lodging market. Since going public, the company has invested in six hotels, totaling about $425 million in acquisitions. Pebblebrook has another two hotels under contract, which would raise its total investment this year to more than $600 million.

In the last year, Bortz said the number of high-quality hotels available in major metropolitan areas has grown every month.

"I describe the market today as robust," Bortz said.

Bortz projected that the window of opportunity for buying in the hotel sector would last between two and three more years. He also says he is hopeful that operating fundamentals will continue to strengthen.

"We're in the very early stage of what we hope will be a five- to eight-year recovery period in the lodging space," he said.