Originally Posted by
moondog
This means that you're losing 450k while the management company is at zero. I'd rather be at zero with minimal exposure than pissing away 450k per month.
Some chains (e.g. Shangri-La and Wanda) try to own as high a percentage of their properties as possible, others invest in properties on an opportunistic basis (e.g. Hilton, Marriott, Hyatt), and the rest are 100% asset light. I'm not sure which model is best, but all 3 have strengths and weaknesses.
Bingo. And this negative 450k/month is just on the Operations Account. We haven't accounted for Depreciation which is typically 10% / year, so Owners only have a 10 year period to breakeven and this pandemic has likely taken 2 of those years away at least.
For those saying owners will be able to "cash out" by selling the property, it really depends on how much they bought it for. Properties don't increase in value by default, and the building + equipment automatically looses value once it is recorded on the books.
Look at cities like Detroit, big city in the world's richest nation can still become a ghost town in this day and age.