The pandemic impacted some industries more than others during 2020. The travel, hospitality and leisure segments, which include short-stay accommodations and hotels, have been significantly disrupted leaving most hotel owners forced to consolidate or simply discontinue operations due to record low occupancy rates. Only a few large national brands were able to use the pandemic as an opportunity to expand or rehab. As a result, CMBS default rates have shown signs of distress with several properties ripe for liquidation to cover over-levered operations.

We expect the leisure and hospitality segments to recover quickly as more travel restrictions are removed with higher vaccination rates within the United States. Occupancy Rates, Average Daily Rates (ADR) and Revenue Per Average Room (RevPar) are returning to pre-pandemic levels as more in-person events are being booked across the nation.

Evergreen Commercial Realty and Berkshire affiliates have access to multiple hotel properties available for sale off-market within Southern California. Institutional investors are beginning to rotate allocation toward hospitality, however there is an opportunity to buy hotels at deep discounts within the current low-occupancy environment.