Seems that within the CRE sector whether equity or debt, the only product type that could potentially provide perks to the financier would be a hotel (in the sense that if you were a lender or equity partner, you could stay at the property for some form of "discount").
Is this considered kosher within the hospitality space for a debt/equity partner to be able to stay at the subject property either for free or at some comped amount? Speaking specifically to nicer resort or 4+ star properties. As a lender (i.e. at a bank or lifeco) would this constitute something improper from a regulators POV?
I had heard stories back in the pre GFC days from private equity LPs who had invested in higher end hotels or resorts (Hawaii, Vegas, Beverly Hills, etc) and essentially got free stays (including family vacations) as a perk of having invested in the deal. Not sure if this still happens or if it would be considered poor form to inquire.
Based on the most helpful WSO content, the practice of receiving perks such as discounted or free stays at hotels for financiers, whether they are lenders or equity partners, does indeed exist within the hospitality finance sector. However, the appropriateness and ethical considerations of such perks can vary significantly based on the policies of the financing institution and regulatory guidelines.
Regulatory Perspective: From a regulator's point of view, especially in more regulated entities like banks or life insurance companies (lifecos), there could be concerns about conflicts of interest or the appearance of impropriety. These institutions typically have strict guidelines about accepting gifts or perks from business partners to avoid any potential conflicts of interest or unethical behavior.
Private Equity and Informal Perks: In the realm of private equity, particularly with less regulated entities, the scenario might be different. Historically, as you mentioned, there have been instances where private equity partners or LPs received perks such as free stays at luxury hotels or resorts. This is often seen as a fringe benefit of investing in high-end hospitality properties. However, the acceptability of such practices can depend heavily on the internal policies of the private equity firm and the specific agreements made with investors.
Current Practices: In the current environment, there is a greater emphasis on transparency and ethical conduct. While it might still be possible for such perks to be offered, they are likely to be more formally structured and disclosed to avoid any potential ethical issues or conflicts of interest.
Inquiry Protocol: If considering inquiring about such perks, it would be prudent to first review the ethical guidelines and policies of your institution. It might also be beneficial to approach the subject with discretion and ensure that any arrangements are transparent and in compliance with all relevant regulations and policies.
In summary, while perks like discounted stays at hotels can still exist for financiers in the hospitality sector, they must be navigated carefully to ensure they align with ethical standards and regulatory requirements.
Sources: Are private debt funds getting fucked right now?, Hotel Crisis, What jobs are you avoiding right now?, Why Hotels?, Checking in 6 years later [IB to MBB transition]
Not on the debt side, but "yes" for the equity. Owner's rates tend to be a ~30% discount but can vary.
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