Hotel investors are switching their focus from acquisitions to developing new properties, according to research by investment advisors Ernst & Young.
According to 300 respondents to its Hospitality Investment Survey, overall hotel investment strategy will be dominated by those creating new facilities for the luxury and ‘upper-upscale’ segment, which is supported by corporate, convention and leisure users.
Ernst & Young says strong growth in China and India, coupled with the opening up of the markets to Western investors, gives Asia the strongest growth potential.
Industry executives expect capitalisation rates for hotel properties to stabilise and possibly increase over the short to mid-term in the US, despite there being a “general perception that hospitality real estate – at least in the US – is overvalued”.
By Elizabeth Clifford-Marsh