NEW YORK, November 19, 2009 – Jones Lang LaSalle Hotels today released its bi-annual Hotel Investor Sentiment Survey which shows hotel investors’ sentiment for short-term (six month) performance in the Americas increased for the first time following six consecutive semi-annual declines and, while still negative, stands at a three-year high.
“While our newest survey reaffirms that investors believe that operating fundamentals still have further to drop over the short term, respondents’ medium-term (two-year) trading performance expectations improved for 80% of the Americas markets surveyed, with investor outlook for international gateway cities at the forefront,” said Arthur Adler, managing director and CEO for Jones Lang LaSalle Hotels.
This improvement in sentiment is a clear indication that investors sense the Americas hotel market is getting closer to the point when RevPAR will flatten out and start to show marginal growth in year-over-year comparisons.
The largest shift in investment intentions was marked by the increase in 'buy' sentiment, reaching its highest level in three years. This survey represents the second consecutive survey where investors’ 'hold' sentiment decreased.
“Through year-to-date 2009, U.S. hotel transaction volumes are at their lowest level of the decade. However, sales volume in the third quarter almost doubled from the previous quarter, providing evidence that the transactions market has passed its cyclical low,” said Adler.
The ‘buy’ sentiment for New York jumped by over 20 percentage points as investors hope to acquire assets in the market at attractive discounts to replacement cost. The other cities attracting the highest investor attention for acquisitions in the U.S. are Los Angeles (61.9 percent), Washington, D.C. (58.6 percent), San Francisco (57.4 percent), San Diego (56.6 percent) and Boston (54.0 percent). “Savvy buyers who are in a strong cash position and who can be aggressive will be able to benefit from the select buying opportunities that emerge,” said Thomas Fisher, managing director for Jones Lang LaSalle Hotels.
Leveraged IRR requirements in the Americas marked a 115 basis point increase on average, but expanded at a lesser rate compared to the previous survey.
“Investors’ expected going-in cap rates, on the other hand, recorded a slight contraction (-50 basis points) from their peak in the last survey to 9.9%, indicating that investors believe the hotel sector is closer to reaching its floor of real estate values,” said Fisher.
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About Jones Lang LaSalle Hotels
Jones Lang LaSalle Hotels, the first and leading global hotel investment services firm, is uniquely positioned to provide the depth and breadth of advice required by hotel investor and operator clients, through a robust and integrated local network. In 2008, Jones Lang LaSalle Hotels provided sale, purchase and financing advice on over $3.7 billion worth of transactions globally relating to more than 120 assets. In addition, advisory and valuation services were provided on more than 600 assignments. The global team comprises over 200 hotel specialists, operating from 36 offices in 19 countries. The firm's advice is supported by a dedicated global research team, which produced 87 publications in 2008 in addition to client research. Jones Lang LaSalle Hotels' services span the hospitality spectrum; from luxury single assets and large portfolios to select service and budget hotels, resorts and pubs. Their services include investment sales, mergers and acquisitions, capital raising, valuation and appraisal, asset management, strategic planning, operator selection, management contract negotiation, consulting, industry research and project development services. Jones Lang LaSalle Hotels' clients have access to the resources of its parent company, Jones Lang LaSalle (NYSE: JLL). www.joneslanglasallehotels.com.