Hotel Mogul Looks to Reinvest in Distressed Market

Hotel mogul and cosmetic surgeon Jerry Schwartz will leverage funds from recent transactions to reinvest in hotels, as soon as the time is right.

Speaking at The Urban Developer’s Hotel vSummit, Schwartz said his recent plays had been prudent but that he remained committed to, and optimistic about, an upswing in fortunes across the hotel market.

“A lot of agents have been suggesting to sell hotel assets due to the lack of supply out there, and conversations [with agents] have been leaning towards selling rather than purchasing.

“People are looking at how hotel values have dramatically dropped, by 10 per cent in some cases, and it's stupid how quickly people have been to write-off the sector.

“Hotel assets will always be positioned sensitively towards disasters—strikes, floods, bushfires, even volcanoes—we have always been able to cater for the downs in order to reap the benefits of the ups,” Schwartz said.

Schwartz Family Company currently holds 15 hotels—or 4000 rooms—in four states and territories, including the five-star Sofitel Sydney Darling Harbour and the Hilton Surfers Paradise.

the four points by sheraton sydney
▲ The Four Points by Sheraton in Sydney.

Schwartz said that while his business had required JobKeeper assistance throughout the pandemic after occupancy rates fell to 10 per cent, portfolio diversification had also helped insulate values.

“I have been lucky and haven’t put all my eggs in one basket, holding a diverse collection of assets in CBD locations, regional locations and resort locations,” Schwartz said.

“We are now coming into a refinancing horizon at the moment in the knowledge and the view that green buds are shooting.

“I have always been with the big four banks, but there is a lot of equity around at the moment, and their lack of confidence in the hotel sector could be problematic as we look to dip back into the market.

“We are now gearing for financing in order to build up funds should the right opportunities arise.”

The hotelier recently moved to sell the Four Points by Sheraton near Sydney’s Central Station, after picking up the 4.5-star hotel for $156 million in 2018.

Prior to the pandemic Schwartz furthered his push into the Gold Coast, purchasing Paradise Resort—a 360-room family-oriented hotel in Surfers Paradise—for $43 million.

It is the company’s second hotel on the Gold Coast, following the acquisition of Hilton Surfers Paradise in 2019.

The company also holds the Fairmont Resort Blue Mountains and Crowne Plaza Hunter Valley—regionally located resorts within driving distances of Sydney's CBD.

“My investment strategy and long-term philosophy has always been built on finding new opportunities,” Schwartz said.

“My father built units at a time when they were unpopular, then picked up shopping centres at a time when they were unpopular, and I entered into the hotel space at a time when they were unpopular.

“Despite the downturn in the sector, there will always be a need for hotels to cater to an innate need from people to travel.”

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