A Reflection from Gilda Perez-Alvarado (SHA ‘02)

On Thursday, April 22nd, 2021, the Cornell Baker Program in Real Estate hosted Gilda Perez-Alvarado, the Global Chief Executive Officer of JLL Hotels & Hospitality, a leading professional services firm that specializes in real estate investment advisory. Having graduated from Cornell’s School of Hotel Administration in 2002, Ms. Perez-Alvarado came back to our virtual classroom of the Distinguish Speakers Series, where she shared her experiences from her illustrious career, as well as her insights on the global hotel and hospitality capital markets.

In 2004, Ms. Perez-Alvarado joined JLLL on the investment sales team, started in the Miami office and after a year moved to the New York office where she represented and advised clients in single asset and portfolio hotel transactions, financings, and asset management projects in the U.S., Caribbean and North Atlantic. She then moved to London on an exchange program and was responsible for luxury hotel transactions in the United Kingdom, Benelux, and Scandinavia. Her primary project was the sale of the world-famous Turnberry Resort in Scotland on behalf of Starwood Hotels and Resorts to the Government of Dubai. She later moved to Madrid as the Head of Hotel Debt Advisory Spain and Portugal, where she was responsible for working with financial institutions for hotel asset receiverships and workouts. During her time in Madrid, she also received her MBA from the Instituto de Empresa (IE Business School). Upon completion of her MBA program, she re-joined the JLL New York office team bringing her international and cross-border experiences to play on the investment sales team. In 2013, Ms. Perez-Alvarado pitched the idea of creating a Global Hotel Desk, which formalised cross-border investments and allowed her to keep working with her colleagues around the world. In 2018, Ms. Perez-Alvarado was named CEO of the Hotels group for the Americas where she continued to lead and drive strategy in the Americas region, the Global Hotel Desk, and cross-border assignments. Now as the Global Chief Executive Officer of JLL Hotels & Hospitality, she heads a team of 350-strong global professionals in over 30 countries working in investment sales, debt and equity placement, strategic advisory and asset management.

Having garnered 19 years working in hotel real estate investment and capital markets, Ms. Perez-Alvarado shared that a general understanding of finance and real estate are necessary factors but not sufficient in understanding global hotel investments. Critical attention needs to be paid to the psychology and motivation of the investor, global macro-economic and social demographic trends in the effort of creating the maximum value for investors. She also noted 5 emerging trends in the hotel capital market as the world still battles with the pandemic:

1. Demand: The hotel industry experienced the most precipitous drop in demand last year as the world came to a standstill due to travel restrictions. Leisure demand is expected to be the first to recover and this was evident during summer 2020 where people escaped to drive-to-destination for vacations. Ms. Perez-Alvarado stated that they remain bullish on this segment of the market as they expect this trend to continue. Corporate business travels remain challenged given the rise of virtual meetings and the use of technology, however, she believes that corporate travel will come back but at a relatively lower level compared to the pre-Covid level.

2. Supply: Hotel closures and development project delays have curtailed supply growth and decreased pipeline. Ms. Perez-Alvarado considers this as a favorable market reaction as she believes that it will help the market recover faster. She further noted that in recent hotel closures, particular consideration has been made to the highest and best use of each piece of real estate as a way of considering other alternative uses like senior living, affordable housing, and condominiums. She expects this trend to be accelerated in the next 12 months.

3. Valuation and transaction: Ms. Perez-Alvarado indicated that valuation and transaction have been the most frustrating area with their capital market clients. There has been so much cash raised targeting distressed hotel assets globally, however, there have been very few transactions. One of the major reasons why we have not seen the level of distress commensurate with the severity of the situation is lenders and governments have been generally accommodating in the last 13 months, thus lowering the level of pressure for hotel owners.

4. Operation: In the last 13 months owners have heightened focus on asset management and value engineering operations by identifying synergies and cutting down on cost. Due to this change in operational efficiency, she is of the view that when full recovery kicks in hotel owners are in the position to increase profitability greatly.

5. Opportunities: From an opportunity perspective, Ms. Perez-Alvarado said the industry is poised for more and more consolidation and she is personally fascinated about the business model of Airbnb and how it will evolve in the coming years. Investing in technology is also an area of opportunity she thinks needs to be capitalized on as we reimagine our hotel spaces, their related services and negotiating with labor unions and various supply chains. In addition, Ms. Perez-Alvarado is convinced that in adjusting to the effects of the pandemic, branded residential as an alternative form of hospitality is the way to go as there is a growing demand for second and third homes. This will create a decent level of diversification with the hotel and hospitality asset class.

Ms. Perez-Alvarado’s presentation was followed by an extensive question and answer session where the students focused on various aspects of her career journey and her insights on the hotel and hospitality capital market. The Baker Program in Real Estate enjoyed hearing Ms. Gilda Perez-Alvarado and thanks her for returning to her alma mater to share his knowledge and experience.

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