Hotel investment transactions are expected to smash last year’s record-breaking $72.5bn total, proving investor’s appetite for the hotel sector remains insatiable.
Investment management firm Jones Lang LaSalle Hotels estimates that $110bn worth of global hotel transactions could be completed by the end of 2007 – a 52% rise on last year.
The company’s latest hotel Investor Sentiment Survey shows that globally buyers outnumber sellers by almost 4:1.
It also showed 23.4% of respondents are looking to build hotel assets, indicating a shortage in investment stock.
Jones Lang LaSalle global CEO Arthur de Haast says global hotel activity has already reached $56bn in the year to June, exceeding predictions.
“Activity is particularly strong in the US, where the market is largely being driven by REITs being taken private and private equity groups buying up not just real estate but also management and brands, as seen with Blackstone’s recent purchase of Hilton Hotels,” he says.
“However, there are fewer opportunities for deals on this scale so attention may turn to other regions, such as Europe, where private equity firms could still find value in buying large hotel businesses.”
“The strength of the global economy, resulting in increased business and leisure travel, combined with the ongoing weight of capital and constrained supply will continue to create an attractive investment environment,” de Haast says.