Jones Lang LaSalle’s newly enhanced Hotel Investor Sentiment Survey (HISS) states that hotel performance sentiment is growing as markets reach pre-recession occupancy levels. The growth can be attributed to more encouraging economic news and employment figures across the Americas.
“Given the increase in operating profits, hotel investors have a notably more positive outlook than they did one year ago,” says Arthur Adler, managing director and CEO-Americas of Jones Lang LaSalle’s Hotels & Hospitality Group. “Hotly contested markets like Los Angeles, New York, Miami, Chicago, and Philadelphia exhibit the highest ratio of buyers to sellers and can expect transactions to heat up in the months ahead.”
Investors’ strategies for the next six months show that 55 percent of respondents are primarily pursuing acquisitions, while 28 percent are focusing on selling assets. The prevalence of transactions has increased by an additional ï¬ve percentage points from the previous survey in December 2012.
Across the Americas, investors’ targeted cap rates held steady at an average of 7.6 percent but are expected to decline slightly during the next six months. Leveraged IRR requirements marked a decrease and are now 40 basis points below the most recent three-year average. The survey was conducted before the recent uptick in interest rates; looking ahead, movement in interest rates will be among the factors shaping investors’ return expectations.
Boston and San Francisco rank as top investment target markets with the strongest hotel performance expectations of the cities surveyed. These cities are followed by the major gateway markets such as New York, Hawaii, Los Angeles, Seattle, and Miami. Driving the performance is increasing corporate and group demand, along with rising levels of international visitors, including those from emerging markets such as Brazil and China.
