The co-head of Blackstone’s huge private equity real estate business told an industry crowd the outlook for investment in the hotel sector remains positive despite warnings the US is in a recession.
Jonathan Gray said the US hospitality industry, particularly hotels, is in “positive” shape, rejecting critics’ arguments that the sector was facing a downturn similar to what it experienced following the September 11, 2001 attacks.
Speaking on the opening day of the Pension Real Estate Association Spring Conference in Boston, Gray told delegates there would be some softening in the hospitality industry, but the impact of the credit crunch would not be as bad as many feared.
“Everyone is expecting it’s going to be like 9/11, that the hotel business is targeted for destruction as the economy slows,” said Gray. “We will certainly be seeing moderation but it’s still positive. It’s not going to be as draconian as what we saw after 9/11.”
Blackstone acquired the Hilton Hotel chain last year in a high-profile $25.6 billion deal.
With Gray saying the hotel industry growth outside the US had been “phenomenal,” fundamentals in the US are still “very strong.”
The warning came as speakers at the PREA conferences sounded a calming note over the state of the economy.
Also at the PREA conference in Boston, Lawrence Summers said, regarding the ongoing credit crunch, that the “darkest moments have passed,” while Wesley Edens, chief executive officer and founder of private equity firm Fortress Investment Group, urged the US government to be more aggressive in supporting homeowners.
He argued that by restoring the “basic premise of finance” the US Federal Reserve could help boost confidence in the rest of the financial sector.
Alan Schwarz, CEO of Bear Stearns, was expected to host one of the panels at the PREA event, but organizers announced that, in light of recent “circumstances,” he was unable to attend.