JONES Lang LaSalle Hotels brings a note of cheer for the new year: the company forecasts that global hotel transaction volume will increase by 20 to 40 per cent in 2010, according to initial results from the firm’s Hotel Investment Outlook 2010 report.
‘Across the world, the trading of single hotel assets, mostly valued at up to $100m, will initiate the recovery. Entrepreneurial transactions that can be financed regionally or locally will be the first to re-enter the market,’ said Arthur de Haast, global CEO of Jones Lang LaSalle Hotels. ‘Equity-rich opportunistic buyers will also look at select larger single-asset transactions in global gateway markets, but our 2010 volume forecast assumes there will be few substantial portfolio transactions in the new year.’
All eyes will be on hotel operating fundamentals in 2010 as the market bottoms, flattens, or starts to show growth, depending on its location. While recovery will vary widely across the globe, investors will be watching for three or more months of consecutive year-over-year room yield growth as a sign of stabilization needed to underpin valuations and boost confidence.
Following the year of frozen liquidity, stalled transactions and drastic drops in hotel performance and values in many hotel markets globally, 2010 will signal a year of improvement and a fresh pace for opportunistic, cashed-up buyers.
‘Savvy buyers who are in a strong cash position and can be aggressive will be able to benefit from the buying opportunities that emerge. Overall, bids will continue to be conservative in 2010, but the early movers stand to capture the most value,’ de Haast said.