Robust Performance from US Hotel Investment Market

The hotel investment sector in the US is performing well so far in 2012, with the average value of single-asset transactions up by five per cent...

The hotel investment sector in the US is performing well so far in 2012, with the average value of single-asset transactions up by five per cent on the full-year level recorded in 2011. Jones Lang LaSalle Hotels revealed investment volume in the sector hit USD 5.1 billion (GBP 3.3 billion) through May, with the median individual deal price standing at USD 40 million. Earlier this month, a report from STR Analytics and the Hotel Investment Barometer found USD 19 billion was invested in the nation's hotels in 2011, with almost one-third (31 per cent) of all transactions for distressed assets.

In this research, real estate investment trusts (REITs) were named as one of the most active groups of investors, accounting for 35 per cent of all deals last year. According to the Jones Lang LaSalle Hotels data for the first five months of 2012, REITs have been involved in 25 per cent of purchases by volume; however, it is private equity investors who have taken the lead, as they are responsible for 52 per cent of transaction volumes. Arthur Adler, Americas chief executive officer at the firm, stated REITs are expected to be "increasingly active in the market in 2012".

"Underpinning investor confidence is the continued strength in hotel operating fundamentals, which are solid across all metrics. On a national basis, hotel revenue per available room has maintained the strong growth rate posted in 2011," Mr Adler commented.  Research released last month by Jones Lang LaSalle Hotels indicated Miami has one of the top performing hospitality sectors in the US, with transaction volumes up by 154 per cent in 2011 and a further increase anticipated this year. Managing director for the firm in Miami Gregory Rumpel identified REITs and private equity funds as two of the groups likely to search for property investment opportunities in the market this year. He added the city's hotels are expected to put in a "strong performance" in the medium term, aided by "high demand levels and significant rate premiums".

- Wednesday 13 June 2012

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