COLUMBUS, OH—The hospitality industry is approaching heights not seen in decades and scores of investors are ready to kick in big money. The private equity firm Rockbridge has just closed its Rockbridge Hospitality Fund VI L.P. after raising $438 million, for example, far exceeding its original fund target of $350 million.

As reported in GlobeSt.com, PwC issued a report on Monday that predicts the industry's occupancy level will reach 64.9% in 2015, the highest since 1984. But Jim Merkel, Rockbridge president and chief executive officer, tells GlobeSt.com that even though the historic downturn has ended, “there are a lot of hotels that need significant infusions of capital.” During the recession many owners failed to make needed reinvestments in their properties, and this opens up opportunities for firms like the Columbus-based Rockbridge, which has invested in and added value to hundreds of hotels over the last 20 years.

The fundamentals in the industry are “as strong as they've ever been,” he adds. But the historically low growth of new supply has given investors even more confidence in hotels and Rockbridge expects to find solid yields in markets throughout the US, including smaller secondary markets.

“There are great deals all over the country,” Merkel says. Rockbridge plans to use the same strategy it has over the years and build a portfolio of investments diversified both by market and property type. He points out that after 9-11, hotels in the vaunted coastal markets saw a steep decline in business, but ones located outside these regions experienced only a tiny drop in occupancy. “At that point in time it was good to be diversified.”

Fund VI has already closed on 11 investments in eight states, representing $131 million of capital commitments and $515 million of total capitalization. Triton Pacific Capital served as the exclusive placement agent for Rockbridge Fund VI and Morrison and Foerster LLP acted as legal counsel.

A typical deal for Rockbridge was its 2013 purchase of a non-performing loan for the historic Canterbury Hotel in Indianapolis. Rockbridge gutted the building and spent about $130,000 per unit transforming the property into Le Meridien, and will reopen the now four-star hotel this December. Merkel expects to make a total of up to 40 investments with this latest fund. In addition to the 11 investments already done, the firm has another four in closing.

The reason for optimism is relatively simple, Merkel says. In a few years, “as sure as we're sitting here, you're going to be paying more for your hotel rooms than you are today.”

But the market is also changing and investors need to respond appropriately, he adds. Millennial travelers, for example, are now the largest generator of demand and they typically demand different things from hotels. A greater focus on green technology and healthier cuisine, including the use of local food producers, has become required. Le Meridien now includes Spoke & Steele, a restaurant which will feature Midwestern cuisine that Merkel says will appeal to locals and give travelers a sense of local food traditions, just the thing millennials find appealing. “It's our job to take hotels that are not well-positioned for that demographic and make them attractive to those travelers.”