Investment funds do play important roles in hotel groups' strategies.

The collapse of tourism and the consequent liquidity difficulties faced by hotels are fuelling an increase in the number of hotels being put up for sale. It was evident at the start of May that the crisis was leading to hotels being put on the market and that prices were being slashed. Some nine months ago, depending on hotel classification and location in the Balearics, prices per room were typically between 200,000 and 400,000 euros. They are now between 100,000 and 150,000 euros.

Investment funds are the most active purchasers, and their view is that hoteliers in the Balearics had been inclined to exaggerate the value of their properties. The current situation has brought about a "normalisation" of value, and there is likely to be a high level of hotel purchase activity this autumn.

At present, there are some eighty hotels which are in the hands of investment funds. It is expected that this number will treble over the course of the rest of 2020 and during 2021. The prices will be much lower than in the past, as hoteliers are having to cut prices in order to maintain their own viability.

A point to be made about investment funds is that they are often key strategic partners for hotel groups. They provide alternative means of finance to banks and have divisions which are highly knowledgeable of the hotel and tourism industry.

Real estate services firm Cushman & Wakefield calculates that the large investment funds, e.g. Hotel Investment Partners and KKR, have between them some 40,000 million euros lined up for Spanish property investment (not just hotels). The latest "Investors" report from Cushman & Wakefield indicates that two-thirds of investment funds are predicting a general recovery and return to normal activity over the next eighteen months. Around a half of funds are not altering their investment strategy as a result of the crisis.

Away from the Balearics, the situation for the islands' hoteliers is no different. Cuba, the Dominican Republic, Jamaica and Mexico are the main centres for their operations, with each country having been impacted by the virus to varying degrees - Mexico has been especially hard hit. It is therefore a similar story where investment funds are concerned, while the development of new hotel complexes have either been shelved for now or dropped. This is the case in Punta Cano (Dominican Republic) in particular. In Cuba, there is a different situation, as the government retains ownership of hotel complexes.