ATLANTA — Transaction volume has been down across the board in the hotel industry, but Pacifica Hotels CEO Matt Marquis said that with high interest rates and unpredictability in the market, that’s not necessarily a bad thing.
“Coming out of the pandemic, I think everyone has a little PTSD. Everyone’s a little cautious, everyone wants to take things a little slower, which I think is really good for our industry,” he said in a recent podcast interview with Hotel News Now at the Hunter Hotel Investment Conference. “There’s still some adjustments in the market to be made if this is going to be our new norm of a little bit higher interest rates. We’re going to have to price that in, and it’s going to take a little bit of time.”
The vast majority of Pacifica’s portfolio is in California, which is unsurprising for the Southern California-based company. But as development becomes more challenging in the state, Marquis said Pacifica has started to look at other big markets in the U.S., such as Atlanta, Nashville and Miami, as potential locations to grow the company.
Its two latest acquisitions were outside of the state of California: the Kimpton Hotel Vintage Seattle and the Kimpton Hotel Vintage Portland.
“More and more, we’re looking to diversify. We still are always going to have our core California assets, but as we look at new opportunities, we are open to going into other major markets around the nation,” he said.
On top of the development issues, markets such as San Francisco, Seattle and Portland are lagging compared to pre-pandemic levels and have faced some negative press, Marquis said. The potential return of those markets provide some tailwinds for the future, though.
“Some [issues] were very public and on the news 24/7, and I think that’s caused a bit of a black eye in some of these markets that have traditionally been really good markets,” he said. “The leaders of those cities and counties really need to focus on, ‘What are we doing to bring business back to our cities?’”
Pacifica’s portfolio of boutique properties has the company in a good position with the latest wave of popularity in experiential travel. Marquis said he believes this trend will continue, but he’s concerned about potential oversaturation in the segment due to brand proliferation.
“There’s a lot of inertia going into some of these different lanes that are in hospitality. Experiential travel is really interesting, but it’s also really hard to operate, it’s really hard to keep your margins,” he said. “As there becomes more supply in experiential travel, will you be able to still charge that premium? Or will there be an oversupply like everything else in economics?”
For more from Pacifica's Matt Marquis, listen to the podcast above.