When The Standard Hotel was built in 2008, New York City and the world was in the midst of a terrible financial crisis. That meant clubs and restaurants were closing right and left. Investors scoffed at anything lux as consumers pinched pennies and watched wallets.
But all that’s over, and five years later The Standard — known for its exclusive clubs, late-night upscale dining, and Sunday night bingo games where people dance on tables — is about to be sold for the highest price of any hotel since the financial crisis, the WSJ reports.
Investor Steven Kantor could shell out over $US400 million to owners Dune Real Estate Partners and Greenfield Partners. That’s $US1.2 million a room.
Part of this success has to be attributed to the hotel’s management company owned by Andre Balazs. It was he who turned the hotel into an adult playground.
Downstairs you have upscale bro’d out beer garden and the Standard Grill, an “American Bistro” that’s open late enough to cater to insomniac guests and NYC partiers. The super-exclusive Boom Boom Room upstairs is known for its near 360 degree views of the Hudson River, and Le Bain, its hipper sister club brings in some of the best DJs in international dance music (and has a killer roof… and a hot tub).
The other part of this success has to do with the hotel market right now. As you may have noticed from Hilton’s wildly successful IPO, it’s booming.
Back in December, when we talked to Ryan Meliker, a senior analyst, Equity Research for investment bank MLV & Co. about Hilton, he said the hotel industry in general is in a really good place right now. As the global economic recovery continues, demand will increase.
At $US22 billion, U.S. hotel transactions in 2013 were 10 times higher than in 2009. What’s more, during a recovery, it’s easier for hotels to raise room rates than it is for office or residential buildings. That means they’re in a better position to take advantage of the money floating around, which investors love.
While some major players are taking this opportunity to buy — like Lowes which is looking to buy about half a dozen properties, according to CEO Paul Whetsell . Others are taking it as an opportunity to sell. Blackstone is planning to IPO another hotel chain it owns, La Quinta.
Another way companies are investing in the industry is by franchising — ramping up the number of hotels it manages but doesn’t own. Companies like Starwood and Marriott have already headed in that direction.
Sounds like this is an industry to watch in general.
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