Senior executives of hospitality and real estate companies are far more optimistic than their counterparts in other industries about the prospects for the economy, according to the results of a survey released by Ernst & Young.　
Seventy-nine percent of hospitality and real estate executives surveyed by Ernst & Young and the Economist Intelligence Unit (EIU) for the latest Capital Confidence Barometer said they were optimistic about the prospects for the economy, compared to just 66 percent among executives of more than 1,000 global firms polled.
The heightened optimism among executives in the hospitality and real estate sectors is also an improvement within their industry sectors. Just six months ago, only 57 percent of hospitality and real estate executives claimed optimism about the economy with a quarter of those polled saying they felt less optimistic.
Not surprisingly, given the heightened sense of optimism among hospitality and real estate executives, a significant proportion are gearing up for what is expected to be an extended period of growth and transactional activity in the real estate and hospitality sectors. In fact, 42 percent say they are focused firmly on either raising or investing capital.
Among transaction types, interest in emerging market and non-distressed asset acquisitions seems to be showing the greatest velocity with interest in emerging markets 50 percent higher than it was last October, and interest in non-distressed assets 75 percent higher than the previous survey findings.
Of the top five areas of focus for hospitality and real estate companies in the next 12 months, cash flow preservation and liquidity are the prime concern, followed closely by cost reduction and operational efficiencies, according to the survey. Part of this focus on cash flow and costs may be due to companies expecting to pursue new acquisitions in the next six months. Many plan to execute deals with significant cash in addition to modest bank financing.
Debt levels don’t seem to be a problem for most companies in the sector, with 70 percent reporting debt-to-capital ratios below 50 percent, and two-thirds of those surveyed claim that access to funding is not a problem for them. However, 42 percent of firms that are looking to grow plan to fund deals through cash, compared to 32 percent who will tap bank loans.
