NEW YORK — When reviewing hotels for potential deals, what's happening — or not happening — in the market plays a major part in deciding whether to pursue it, not just the location itself.

Even in markets that are doing well or are poised to see a big jump in demand, investors look at all the factors at play to evaluate the potential risks that could cut into profits. There are risks in financing at high rates, but there are also regulatory and political risks to factor in as well.

During a recent meeting of the Lodging Industry Investment Council, hotel executives shared their perspectives on some of the major U.S. hotel markets and what makes them desirable or too big a risk.

Guy Maisnik, partner and vice chair of the global hospitality group at Jeffer Mangels Butler & Mitchell, said several of his law firm’s private equity clients are opportunistic buyers taking a serious look at San Francisco under the theory the market isn’t getting any worse.

“As a result, they think it’s a conservative investment, and they’re pricing it based on the numbers that are coming in now,” he said.

Even with all the issues they identify in California generally, such as regulations and labor, and San Francisco specifically with crime, they see those as creating barriers to investment, he said. They’re looking at not just hotels but other asset classes that are convertible to hotels.

Data from the Council's recent member survey showed that New York City rapidly rose recently to become a highly desirable market for hoteliers, said Mike Cahill, founder and CEO of Hospitality Real Estate Counselors. Boston was the most desired market. Members showed interest in San Francisco and Los Angeles, but the problem is finding product at the right price.

“If you have hotels in those markets ... then you wouldn’t sell at today’s pricing. You would hold on to it,” he said. “The issue is ... whether or not these products can actually come up and be available to buy.”

Cahill pointed out New York City's undeniable "cool factor" that make it attractive to young professionals. People with the choice to work in San Francisco or New York — both cities with plenty of issues — typically choose New York, which factors into the high demand numbers there, he said.

“I wonder if there’s a fundamental difference between liberal, blue-state California and liberal, blue-state New York that makes people less scared of municipality risk as an owner?” he posited.

The politics in San Francisco and Los Angeles are extreme, Maisnik said. To cite an example, he said New York never put an issue on the ballot or had the city council vote on whether hotels with available rooms should take in the unhoused.

“I don’t think New York does things like that,” he said. “If that’s not insane — we can say that in California, and I think that’s what scares investors.”

Within California, San Francisco is very different from Los Angeles, Aperture Hotels CEO Charles Oswald said.

“I think all bad ideas begin in L.A.,” he said.

San Francisco’s union environment is not nearly as hostile to hotel companies as Los Angeles' is, he said. No one knows when the next strike is coming in Los Angeles, which disrupts operations and makes it tough for guests to know what to expect.

New York's renaissance began when Wall Street stepped up to give the city funding for more safety measures, said Waramaug Hospitality CEO Ferit Ferhangil. That’s what San Francisco needs to attract people to work there.

“What’s happening in San Francisco is the tech companies were very selfish until this year,” he said. “They finally said, ‘We’re going to do that. We are going to put up the money for the private security on the streets until the police academy can have more police officers.'”

This new development is why Ferhangil said he’s more bullish on San Francisco from a safety perspective over the next three to four years.

Generally, politicians need to learn about supply and demand in business, he said. Minneapolis went to an extreme when it tried to ban Ubers, but now it’s launched a five-year mega plan to invest in the city and bring back tourism and increase visitors by 10 million in that time frame.

“They realized they were going to bankrupt the city if they stuck to the plan,” he said.

Those tech companies in San Francisco also are now getting involved in local politics, raising money for, donating to and putting up their own candidates to replace the ones who put the city in its predicament, Oswald said.

Another interesting thing about the difference between building in Los Angeles versus New York is the timeline to get a project up, Maisnik said. It can take four to seven years to get a significant project up, or even just to get approvals, because of the logjam in Los Angeles' government.

“The city is putting systems in order to expedite approvals,” he said. “Unfortunately, we still have the logjam because of all the different groups that get to weigh in. I don’t think you have that. Somehow, New York with all its different competing groups, has made that work. It doesn’t work as well in Los Angeles or San Francisco.”

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