This article is sponsored by KSL Capital Partners
What were your firm’s key events in 2023?
In our more than 30 years of investing exclusively in travel and leisure, we have developed three strategies: equity, credit and tactical opportunities. Our concentrated approach has made KSL an industry leader and continues to drive our success today.
While it is a challenging fundraising market from a macro perspective, we are really glad we have a large group of investors, some of whom have been with us for over 30 years, some for the first time.
Other recent highlights included closing the $3 billion Alterra Mountain Company continuation vehicle, as well as our fourth private credit fund at its hard-cap of $1.26 billion. We are also at the five-yard line of a comprehensive fundraising program across multiple strategies.
In terms of deal activity, we completed the $1.4 billion acquisition of Hersha Hospitality Trust, the largest take-private of a hotel REIT since covid, as well as an off-market acquisition of a majority interest in Sereno Hotels, an ultra-luxury hotel company in Lake Como and St Barths.
We also bought Martin Resorts: five boutique hotels, family-owned and operated for decades along the California Central Coast, representing an expansion of our focus in that growing market.
What has the operating environment been like in the market?
The past year was characterized by uncertainty. Everywhere. You had uncertainty in the fundraising market, uncertainty about where interest rates were going, uncertainty with inflation, uncertainty in geopolitical tensions and uncertainty about credit availability.
What were the key challenges that you had to overcome?
The challenges of the past year demonstrated the efficacy of KSL’s dedicated focus and strategy.
Interest rates and fundraising were big challenges. There is a wider bid-ask gap between buyers and sellers as a result of an uncertain economic outlook. If there is a bid-ask gap of 5 percent, even 10 percent, you can bridge that. When the gap is more like 15-20 percent – where it was for 2023 – it is a lot harder to bridge that.
As a result, volume slows. Transactions might have slowed by 50, 60 or even 70 percent, and we were not immune to that. But we deployed a significant amount of capital despite it.
Within the travel and leisure sector in which we operate, we are a strategic investor. Especially in off-market deals, people prefer to sell to strategic investors because, with those synergies, we can get more value out of the business.
Who or what is responsible for your success?
It is our people. Over 30-plus years, KSL has grown with the belief that strong performance starts with great people.
People, both the KSL team and the more than 50,000 employees across our portfolio companies, are absolutely our greatest asset.
But it is also discipline; being willing to not invest is sometimes the best decision. Having dry powder can be the enemy of that discipline.
To maintain that discipline, and to have a consistently attractive track record across economic cycles, is critical.
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