In a recent report on San Francisco's hotel investment market, Jones Lang LaSalle Hotels states that with three-quarters of upper-upscale hotels recently undergoing a renovation, San Francisco is a model of what can be done during the current market environment to maximize revenues, allowing investors to enhance value and give way to a stronger post-crunch market position. The firm recently publishedHotel Intelligence: San Francisco.
The illiquidity in the debt markets has many investors taking a "wait and see" approach, but San Francisco is experiencing strong investor interest. What makes San Francisco unique is the widespread focus on renovation. "Already a front-runner in year-to-date RevPAR gains, San Francisco's investors are focusing their attention - and dollars - on capital improvements, which will lift the ADR ceiling even higher, and will give way to a stronger position once transaction levels accelerate," said Kristina Paider, senior vice president of research and marketing for Jones Lang LaSalle Hotels. With few hotels are up for sale, investors are focusing on income enhancement.
As a top U.S. and international destination that continues to attract significant investor interest, San Francisco's hotel market is characterized by high barriers to entry and superior fundamentals. San Francisco's supply pipeline remains benign due to the scarcity of development sites and high land and construction costs. Only four new hotels opened in San Francisco since 2004.
San Francisco's RevPAR growth projection through 2010 outperforms that of Chicago, Los Angeles and Washington, D.C. "With plenty of newly renovated product along with the weakness of the dollar and a strong convention year ahead, San Francisco's hotel market is in a sound position to weather the economic softening," said Anwar Elgonemy, senior vice president for Jones Lang LaSalle Hotels.
Jones Lang LaSalle Hotels, the first and leading global hotel investment services firm, is uniquely positioned to provide both the depth and breadth of advice required by hotel investors and hotel companies, through a robust and integrated local network. In 2007, Jones Lang LaSalle Hotels provided sale and purchase advice on 259 hotel transactions globally; representing a combined value of US$13.9 billion, a total of 54,763 hotel rooms in 84 cities. In addition advisory and valuation services were provided on 660 assignments globally for 182,048 rooms across more than 300 cities.
The global team comprises over 270 hotel specialists, operating from 31 offices in 18 countries. The firm's advice is supported by a dedicated global research team, which produced over 45 publications in 2007 in addition to client research. Jones Lang LaSalle Hotels' services span the hospitality spectrum; from luxury single assets and large portfolios to select service and budget hotels, resorts and pubs. Their services include investment sales, mergers and acquisitions, capital raising, valuation and appraisal, asset management, strategic planning, operator selection, management contract negotiation, consulting, industry research and project development services. Jones Lang LaSalle Hotels' clients have access to the resources of its parent company, Jones Lang LaSalle (NYSE: JLL). www.joneslanglasallehotels.com