A Look at Lodging with JLL Senior Vice President Christopher Exler
Christopher Exler is Senior Vice President with JLL’s Miami Hotel and Hospitality team, responsible for shaping and executing disposal and origination strategies. He specializes in maintaining investor relationships, monitoring international capital flows, investment advisory and managing the marketing and due diligence process.
Before joining JLL Miami’s Hotel and Hospitality team, Exler worked with the JLL Hotels and Hospitality team in London for eight years, where he helped facilitate $3.5 billion of single-asset and portfolio transactions across Europe, including The Ritz London, Sanderson & St Martins Lane London, K+K European Portfolio, Sheraton Amsterdam Airport, Radisson Hospitality Complex Bucharest and the Ace Hotel London Shoreditch. Prior to joining JLL, he worked with hospitality consultant Horwath HTL in London and Cape Town, South Africa.
MBA NEWSLINK: How has the lodging recovery met expectations?
CHRISTOPHER EXLER: It’s exceeded them. To put it in numbers, of the top 25 lodging markets nationwide, 15 have recovered 80 percent or more in revenue per available room, with Miami, Tampa and Phoenix having fully recovered or moved past pre-pandemic performance.
On the investment side, 2021 saw transaction volume 32 percent above 2019. The hotel space has quickly moved from pariah status with expectations of substantial distress to one where the demand is outstripping supply. Challenges remain in that leisure demand is compensating for other segments, namely group and corporate travel, and staff shortages are not likely to be sustainable for everyone.
NEWSLINK: Where do you see the debt and equity markets?
EXLER: Emerging from the pandemic there has been a flight to quality, which incidentally we’ve seen garner pre-pandemic premiums in certain circumstances. That said, we’ve also seen a more programmatic approach within certain themes such as extended stay, select service and hybrid models like condo hotels.
Conversely, ground-up development remains challenging in today’s environment, with spreads having moved out meaningfully for all but the best sites and sponsors.
NEWSLINK: What are some of the key themes you’re seeing at a macro level and more specifically in the markets you cover?
EXLER: The optimism for our industry is now tangible as prospects for a faster than expected recovery bears fruit, perhaps not at the same speed for everyone, but by 2024 for most. Revenue centers that historically may have played second fiddle to the core rooms and products within hotels and resorts have blossomed with a robust return for food and beverage, outdoor pursuits, wellness and even gaming.
The outlook from Miami, where I’m based, also looks pretty enticing. In fact it’s become an epicenter for virtually every asset class in real estate on the back of what feels like a permanent shift in fundamentals. The city is fashioning itself as the world’s crypto capital while tech start-ups enjoyed a three-fold increase in fundraising last year.
The lodging markets we cover from here have been largely oversubscribed on hotels deals in South Florida, Orlando and Tampa. We’ve also seen Puerto Rico open up, evidenced by the recent Ritz-Carlton Reserve Dorado Beach trade JLL advised on, among others. It’s a market that has always punched above its weight and its clear investors are increasingly paying it attention.
NEWSLINK: Where does the ESG narrative fit into the sector at this stage? Are investors beginning to factor it into their underwriting?
EXLER: Industry awareness has dramatically increased on the subject, although I think it remains largely academic, yet we’re seeing that change as it becomes easier to measure. Larger institutions are perhaps unsurprisingly at the forefront, driven by stakeholder capitalism and growing the “triple bottom line” that includes but goes beyond a financial return.
Subsequently, investors are taking note. Does it directly impact underwriting on a normal day? Not that we’re seeing, at least not yet. We do know that investors, particularly European investors, are starting to consider the liability of not future-proofing their existing portfolios for downstream regulations and changing consumer preferences. Think asset management initiatives to reduce consumption of utilities and direct employee education at their hotels. What this is likely doing is influencing decision-making on how additions to portfolios are vetted and priced, especially for larger investments.
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