Record $48 billion of hotel sales predicted by year-end 2007
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Record $48 billion of hotel sales predicted by year-end 2007
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Category: Worldwide -
This is a press release selected by our editorial committee and published online for free on 2007-08-14
Jones Lang LaSalle Hotels estimates that $48 billion worth of U.S. hotel sales could be completed by the end of 2007. This represents the fourth consecutive year of record volume, and a 37% lift on last year’s record-breaking figure of $35 billion, proving that investors’ appetite for the hotel sector remains at an unprecedented high level.
“U.S. hotel deal activity to June has already reached $32 billion, higher than we initially predicted. This represents more than half of the global volume of $56 billion for the same period,” said Kristina Paider, senior vice president of research and marketing for Jones Lang LaSalle Hotels. “One half of the sales of this period were driven by REITs being taken private, and another third was private equity groups buying up real estate as well as management and brands, as seen with Blackstone’s recent purchase of Hilton Hotels Corporation.”
The 14th edition of Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey (“HISS”) highlights investors’ ongoing enthusiasm for the hotel sector. It shows that Americas’ buyers outnumber sellers by 5:2. Investors indicated upscale hotels as their preferred asset type in 26 of the 29 surveyed markets. The survey also shows that 18.5% of respondents are now expecting to build hotel assets, indicating that investors are being pushed to consider development due to the shortage of available investment stock.
“With continued confidence in trading performance we are expecting balanced growth going forward. Our survey results demonstrate that yields are still tightening and investors’ expectations for leveraged IRRs have tapered slightly as interest rates rise due to the recent credit crunch. While the credit markets are showing signs of weakness, the strength of the economy, resulting in increased business and leisure travel, combined with constrained supply will continue to create an attractive investment environment,” said Arthur Adler, managing director and CEO-Americas for Jones Lang LaSalle Hotels.
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