Blackstone targets more hospitality deals

Hawaii Hotels at Waikiki Beach
Hawaii Hotels at Waikiki Beach. (7maru/Getty Images)

Insight Comment
With plenty of cash ready to deploy, you’d expect Blackstone to have more hospitality deals ready to go in the very near future.

Blackstone is looking to grow the number of hospitality assets it holds as it aims to take advantage of an expected recovery in travel demand over the coming months and years. 

Historically, the company’s exposure to the sector had been pretty high but had gradually dwindled to make up only around 7% of its portfolio. Now with Covid-19 pandemic changing the equation, the company is looking to change things.

“I think that number will go up. One, I think we're going to see more of a recovery in our existing assets; but two, that's a sector that was hit hard by Covid. And so you've seen in recent announcements, we bought in real estate and private equity. Jointly Bourne Leisure in the UK, which is the leading leisure park business there. We acquired Extended Stay Hotels in our real estate business, again, a play on the recovery in travel. And I wouldn't be surprised if we continue to do more in this space that, that percentage goes up,” Jon Gray, Blackstone’s chief operation officer, said on the company’s second-quarter earnings call.

Those two deals represent a significant vote of confidence in a sector that has been battered by closures and travel restrictions during the last 18 months.
“We do think people will return to travel, individual and leisure travel first, over time, corporate and group travel. And so it's a sector we like. We definitely have, by far, the lowest exposure we've had to it, but we'd like to increase that exposure going forward,” Gray added.

Second-quarter results.

Blackstone’s net profit for the three months to the end of June more than doubled to $2.9 billion. Capital deployment reached $23.8 billion in the quarter. It has also committed an additional $28.5 billion, which it has yet to deploy.

“The second quarter, in my view, was the most consequential in our history, not just in terms of financial results, but more importantly, in terms of setting the foundation for the firm's long-term growth trajectory,” CEO Steve Schwarzman said on the call.