Hotel Sales up 124% in 2010

Is the frozen hotel sales market about to thaw?

While temperatures across many parts of the country have signaled an early start to the summer season, so too is the action in the hotel sales marketing heating up, as buyers and sellers appear to be moving closer to agreement on pricing.
According to a new research report from Jones Lang LaSalle Hotels, FocusOn: Market Equilibrium Leading to Opportunities for Hotel Buyers and Sellers, hotel transaction volume totaled $1.8 billion through May 2010, or a 124% increase over the same period in 2009.

To read the full story, click here.

>>Ben Johnson l 6.13.10

Hotel Investors’ Short-Term Outlook Improves

Hotel investors have more reason to be bullish after seeing better results over the past six months, according to a bi-annual Hotel Investor Sentiment Survey by Jones Lang LaSalle Hotels. Short-term performance in the Americas increased for the first time following six consecutive semi-annual declines and, while still negative, stands at a three-year high.

“While our newest survey reaffirms that investors believe that operating fundamentals still have further to drop over the short term, respondents’ medium-term (two-year) trading performance expectations improved for 80% of the Americas markets surveyed, with investor outlook for international gateway cities at the forefront,” said Arthur Adler, managing director and CEO for Jones Lang LaSalle Hotels.

This improvement in sentiment is a clear indication that investors sense the Americas hotel market is getting closer to the point when RevPAR will flatten out and start to show marginal growth in year-over-year comparisons.The largest shift in investment intentions was marked by the increase in ‘buy’ sentiment, reaching its highest level in three years. This survey represents the second consecutive survey where investors’ ‘hold’ sentiment decreased.

“Through year-to-date 2009, U.S. hotel transaction volumes are at their lowest level of the decade. However, sales volume in the third quarter almost doubled from the previous quarter, providing evidence that the transactions market has passed its cyclical low,” said Adler.

The ‘buy’ sentiment for New York jumped by over 20 percentage points as investors hope to acquire assets in the market at attractive discounts to replacement cost. The other cities attracting the highest investor attention for acquisitions in the U.S. are Los Angeles (61.9%), Washington, D.C. (58.6%), San Francisco (57.4%), San Diego (56.6%) and Boston (54.0%). “Savvy buyers who are in a strong cash position and who can be aggressive will be able to benefit from the select buying opportunities that emerge,” said Thomas Fisher, managing director for Jones Lang LaSalle Hotels.

Leveraged IRR requirements in the Americas marked a 115 basis point increase on average, but expanded at a lesser rate compared to the previous survey.

“Investors’ expected going-in cap rates, on the other hand, recorded a slight contraction (-50 basis points) from their peak in the last survey to 9.9%, indicating that investors believe the hotel sector is closer to reaching its floor of real estate values,” said Fisher.

To request access to the full report, click here.

>>Ben Johnson l 11.19.09


Local Hotels Feel More Heat in June

June was another unkind month to the Oklahoma City hotel industry. According to PKF Hospitality Research, the occupancy rate for OKC hotels dropped 8.8%, in line with the state average but down considerably more than Tulsa hotels which saw occupancy drop 6.6% for the month. OKC hotels saw occupancy of 65.8% in June compared to 74.6% in June 2008.
OKC hotels also saw their average daily room rates dip by 4.1% in June versus 2.2% in Tulsa, while revenue per available room fell more dramatically, by 15.4% versus 11.6% in Tulsa.
Year to date, OKC hotels are faring marginally better than their Tulsa brethren. Through the first six months of 2009, OKC hotel occupancies were down 5.8% versus a drop of 8.9% in Tulsa, while revenue per available dropped 12.1% versus 14%, respectively.


Are Hotel Transactions Rebounding?

The volume of global hotel sales bottomed in the first quarter of 2009 and showed a slight uptick in the second quarter of the year, according to a new report from Chicago-based Jones Lang LaSalle Hotels.

Global hotel transaction activity during the first half of 2009 totalled $3.7 billion, representing a 78 percent downturn compared with the first half of 2008. Following consecutive quarterly declines throughout 2008, the second quarter posted an uptick. Promising signs have surfaced after the first quarter of 2009 marked the low point in hotel transactions – the weakest activity level tracked since the third quarter in 2001, when the market was badly impacted by the 9/11 attack in New York.

“Global hotel transaction volumes during the second quarter of 2009 showed a three percent increase on the previous quarter, the first quarterly increase following five consecutive quarters of declines,” said Arthur de Haast, global CEO of Jones Lang LaSalle Hotels.

During the first half of 2009, Europe, Middle East and Africa (EMEA) was the most liquid region, with hotel transaction volumes of $1.9 billion, down 76 percent from the first half of 2008. The Americas was the second most liquid region globally, but also saw the most pronounced decline in transaction volume, down 86 percent to $1.0 billion. Asia Pacific hotel transaction activity showed a more moderate decline, comparatively, of 55 percent, to $0.9 billion.

Sustained revenue per available room (RevPAR) declines globally – mostly in the double digits – and ongoing debt market illiquidity continued to be significant challenges for hotel investors.

“Just 13 of the hotel transactions globally were in excess of $100 million, compared with 34 transactions during the first half of 2008. This shows that credit for larger transactions has dried up further this year, from an already constricted financing environment in 2008,” said de Haast.

The outlook for hotel transactions is starting to look more favourable. “Steady monthly increases in global transaction volume since May 2009 demonstrate that the industry is recovering from the trough in investment activity,” said de Haast. “With the number of distressed sellers on the rise, and a number of transactions approaching their closing dates, we expect to see higher hotel transaction activity in the second half of 2009.”


Green Lives! Sears Tower getting eco hotel neighbor

In a bid to “trump” many of its sky-high neighbors, the owners of the Sears Tower in Chicago plan to build an environmentally friendly hotel next door. And, that’s not all. The Sears Tower itself is going green.
According to John Huston, president of American Landmark Properties, the owner of Sears Tower, a hotel will be built at Wacker Drive and Jackson Boulevard. The designer is famed local architect Adrian Smith, whose recent Trump International Hotel & Tower is the tallest American skyscraper to be built since the Sears Tower was completed in 1973.
In a stunner, Huston says the hotel will be financed privately, and will draw “net zero energy from the power grid.”
The Sears Tower itself is joining the eco-friendly club as it makes a bid to become energy efficient. The greening program could include the installation of grass, shrubs and even trees on the building’s roof, as well and changes to its mechanical systems to save energy.
The end goal is to obtain the coveted LEED certification, with stands for Leadership in Energy and Environmental Design. LEED certification is granted by the U.S. Green Building Council in Washington, D.C.
>>Ben Johnson l 6.29.09


How Healthy is OKC’s Hotel Market?

Judging by historical data from leading hotel researchers Smith Travel Research and PKF Consulting, the Oklahoma City hospitality market is finally beginning to feel the ill effects of the national recession.

Hotel occupancy across the city reached 64.3% in 2007, the peak of the recent boom times, but fell to 61.6% in 2008, a drop of 4.3%. Meanwhile, the average daily room rate increased steadily from 2006 to 2008, reaching $75.92 a night at the end of 2008, or a 10% increase.
That made hoteliers happy as they saw revenue per available, or RevPAR, jump 9.5% from 2006 to 2008.

More recent data suggests a reversal of fortunes. According to PKF, the city’s occupancy fell 5.1% to 62.2% in the first four months of the year compared to a year ago. Room rates also slipped by 4.2% and RevPAR was down 11.4%. Much of the decline came in January, but April was another brutal month, with RevPAR dropping 17.2% from a year ago.

Given the recent trendline, hoteliers across the city are bracing for a hard summer.
>>Ben Johnson l 6.11.09