Interest Rates: Continued high interest rates and credit spreads will impact the consumer by reducing disposable income as consumers are faced with higher mortgage costs, higher credit card debt, etc. This results directly from the fastest increase in short-term interest rates by the Federal Reserve, in its history.
Inflation: While the rate of inflation growth has declined, this is simply a lower growth rate on an already increased base amount. US consumers are paying significantly more for almost every good and service. This includes hotel room rates, banquet and catering events, restaurants, etc. Inflation meaningfully reduces buyer purchasing power.
Lagging Real ADR and Real RevPAR: Real ADR and Real RevPAR are just catching up to 2019 levels. While reported ADR and RevPAR figures, nationally, and in many markets have eclipsed 2019 levels, this is a result of significant inflation. Real ADR and real RevPAR, adjusted for inflation, are just catching up to 2019 levels.
Increased Operating and Fixed Costs: Many hotel operating costs are experiencing significant increases. This includes wages (which are usually the largest expense of a hotel), employee benefits, property and casualty insurance, and property taxes. All of these are creating significant downward pressure on margins.
Financial Distress: Many hotels will experience financial distress as their borrowing costs have increased substantially, accompanied by a substantial reduction in available debt financing. This will force many owners to default on their loans, be foreclosed on, or sell at a terrible time, either generating losses or severely curtailing previously expected profits. Lenders will become more aggressive in foreclosures and in selling loans so that their own balance sheets do not become impaired.
Jonathan Falik
Founder & Chief Executive Officer
JF Capital Advisors
Jonathan Falik is the Founder and Chief Executive Officer of JF Capital Advisors. Mr. Falik leads the firm’s hospitality business, which includes equity and debt placement, asset acquisitions and dispositions, portfolio transactions, joint venture structuring, asset management, management company and brand evaluation, and strategic and capital markets advisory services.
Mr. Falik was a Senior Managing Director and the Head of Hospitality Capital Markets at BGC Real Estate Capital Markets. Simultaneously, Mr. Falik was the Head of Hotel Investment Sales for Newmark Grubb Knight Frank. Previously, Mr. Falik was a Managing Director and Head of the Lodging and Leisure Investment Banking group at Cantor Fitzgerald & Co.
Prior to joining Cantor Fitzgerald, Mr. Falik was the founder and CEO of JF Capital Advisors, a lodging advisory and principal investment firm. While at JF Capital, Mr. Falik led the acquisition or development of 25 hotels with over 5,500 keys and an aggregate cost of approximately $1 billion. Additionally, Mr. Falik was the CEO of Eagle Hospitality Trust, a 13 hotel-property private REIT. Mr. Falik has led the sales of single assets and portfolios of over 100 hotels for over $2.5 billion of value. Before founding JF Capital in 2004, Mr. Falik was an investment banker at Bear Stearns in the Gaming, Lodging and Leisure Group. Mr. Falik began his career as a CPA at Price Waterhouse.
Mr. Falik has over 25 years of experience in the real estate and lodging sector. He has worked on numerous M&A and financing transactions involving well over 2,000 hotels and over $35 billion of transaction value. Of the $35 billion, $34 billion was completed as an advisor and $1 billion was completed as a principal. He has been actively involved with mergers and acquisitions of public and private companies, portfolio sales and single asset sales, equity financings, high yield financings and mortgage financings. Mr. Falik has extensive hospitality experience as an agent, advisor, principal, owner, borrower, guarantor, franchisee, lender and asset manager.
Mr. Falik received a BA in economics with high honors from Rutgers College and an MBA from Columbia Business School with a concentration in Real Estate Finance. Mr. Falik has been an adjunct professor at NYU’s Real Estate Institute and is an active lecturer and panelist at industry events. Additionally, Mr. Falik was on the board of the Boutique & Lifestyle Lodging Association and received its first ever Legends Award.
