One of the Chicago area’s most prominent hotel developers and managers has a big appetite for more hospitality properties, betting hotels nationwide are poised for a strong post-COVID-19 comeback.
Rosemont-based First Hospitality today announced it has partnered with New York-based hotel investor Georgetown to launch a new fund that will aim to buy $1 billion worth of upscale and luxury hotel properties across the U.S. over the next few years. Under the agreement, Georgetown will take a “significant ownership interest” in First Hospitality and spearhead the acquisition process, with First Hospitality serving as the manager of properties they buy, the firms said in a statement.
The partnership is a gutsy wager on a property sector that was initially leveled by the pandemic and has labored to recover since then, with a murky outlook for when or if certain types of travel will ever be as robust as they were pre-COVID. While leisure travel surged nationwide over the summer, business travel remains at a historically low level, and both have been set back by the spread of the delta variant.
But First Hospitality and Georgetown are among the investors salivating at the opportunity to buy low and ride the market up.
“We know that hospitality assets will inevitably see a strong rebound in the years following the pandemic, ultimately creating significant value for investors,” Georgetown CEO Adam Flatto said in the statement. “First Hospitality has a stellar reputation and we are honored to partner with them as we launch this venture.”
The joint venture will be led by First Hospitality President & CEO David Duncan and Georgetown Managing Director and Head of Hospitality Michael Fishbin, who joined the company in February 2020. Stephen Schwartz, who founded First Hospitality in 1985, will continue as the firm’s chairman, and his family will keep “long-term strategic control” of the firm, the statement said.
“We have maintained a steadfast focus on the long-term growth and success of First Hospitality for over three decades,” Schwartz said in the statement. “Our family is excited to partner with the Georgetown Co. to continue acquiring exciting assets and grow our management portfolio nationwide.”
First Hospitality has been especially active in Chicago over the past few years. The firm developed the tri-brand Hilton property that opened next to McCormick Place in 2018 and was part of the development team behind the 223-room Sable hotel that opened in the middle of Navy Pier earlier this year. The company owns or manages more than 50 hotels nationwide, including 21 brands.