Investment in global hotel markets strong in first three months of 2010, a new report shows

Written by Ray Clancy

Friday, 16 April 2010 10:00

Global hotel investment Levels were up 53% year-on-year in the first quarter of 2010 with volumes reaching $2.8 billion, according to a new report.

Europe, Middle East and Africa (EMEA) remained the most active region recording $1.1 billion of hotel sales, a 46% year-on-year increase for the same period, while the Americas saw a 70% in increase in sales to $991 million and Asia Pacific was up 43% to $736 million.

In EMEA the UK accounted for $324 million of hotel sales, the highest level recorded in the region for the period and marks a significant year-on-year increase compared to the $92 million transacted in the same period in 2009, the report from consultants Jones Lang LaSalle Hotels.

‘With a more positive investor sentiment for hotel real estate assets, transactional activity has accelerated significantly since the start of the year. As the global credit markets have begun to ease there is a greater weight of capital targeting the market for acquisition opportunities,’ explained Arthur de Haast, Jones Lang LaSalle Hotel’s Global chief executive.

‘We have also witnessed a noticeable increase in stock being offered to the market with increased sale activity from banks and other lenders who have taken control of more assets over the last year in an attempt to reduce their hotel loan portfolios,’ he added.

The report shows that maintaining the trend from 2009 institutional investors have remained the most prolific investors across EMEA, seeking assets in secure Western European markets with stable incomes, and were responsible for more than a third of buying activity in the region.

In the Americas investor interest remains strong from domestic buyers but also international groups, who accounted for 34% of all transaction during the first quarter of 2010. With the recovery in public markets, US based REITS are also becoming increasingly acquisitive and purchased more than $441 million worth of hotels during the first three months of the year.

Asia based conglomerates and high net worth investors continue to dominate activity in the region, accounting for almost half of all transactions undertaken during the first three months of the year. Investor interest is very strong in Australia and Japan within the region and both countries recorded more than $350 million worth of hotel sales in the first quarter.

‘The global hotel investment market during 2009 was plagued by a deficient debt market and a lack of quality stock, but the start of 2010 is already showing healthy signs for transactional activity, which should set the tone for the remainder of the year,’ said De Haast.

‘While buyers and lenders remain cautious, funding is increasingly available for the right deals and coveted prime assets in key gateway cities are becoming more available driven partly by the sale of individual hotels by the banking industry, but also a better balance between buyer and vendor expectations on pricing,’ he added.