As Business Travel Rebounds, Hotels and Resorts are in Play

© Moshe Milner, Israel Government Press Office

By Liz Moyer

AiVIF.com -- Hotel operators that emphasize group and business travel are ripe for investment as the industry rebounds after the pandemic.

Blackstone Group Inc's (NYSE:BX) quarterly stock ownership disclosure showed it held more than 8 million shares of Sunstone Hotel Investors Inc (NYSE:SHO), a California hotel real estate investment trust. The stake is about 4%, in another bet on a rebound in the travel industry.

Sunstone Hotel Investors owns resorts such as the Wailea Beach Resort, managed by Marriott International Inc (NASDAQ:MAR), and the Four Seasons Napa Valley. It recently completed the purchase of the Confidante Miami Beach, which is managed by Hyatt Hotels Corporation (NYSE:H), and an interest in the Hilton Worldwide Holdings Inc (NYSE:HLT) San Diego Bayfront.

Sunstone CEO Bryan A. Giglia said earlier in August that they are seeing an increase in business and group demand adding to already strong leisure travel. Occupancy is at the highest level since early 2020, he added.

“While growth continues to be uneven across markets, we are encouraged by the trends we are seeing,” Giglia said.

Spending on business travel is expected to surge this year on its way to a full recovery in 2024, when it is projected to be on pace with the $1.4 trillion of spending in 2019. That would be a year earlier than expected, according to the Global Business Travel Association.

Travel news website Skift says Blackstone’s backing could help Sunstone speed up its hotel acquisition strategy. It is also a way for Blackstone to play the rebound in the travel sector, especially business travel.

The private equity giant has already dabbled in that space. Last year its real estate group teamed up with Starwood Capital to buy Extended Stay America for $6 billion. And earlier this year, the two teamed up again to buy more than 100 properties branded WoodSpring Suites, which is franchised by Choice Hotels International Inc (NYSE:CHH), for $1.5 billion.

Group travel is nearly half of Sunstone’s business, Skift noted, and Blackstone has an interest in a booking website called Groups360 that puts meeting planners in touch with venues, a possible cross-selling opportunity.