Jones Lang LaSalle Hotels estimates that $110 billion worth of global hotel transactions could be completed by the end of 2007. This represents a 52% rise on last year's record-breaking figure of $72.5bn, proving that investors' appetite for the hotel sector remains at an unprecedented high level.
Arthur de Haast, Global CEO, Jones Lang LaSalle Hotels said: "Global hotel deal activity to June has already reached $56bn, higher than we initially predicted for this period. 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 Corporation. 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 14th edition of Jones Lang LaSalle Hotels' Hotel Investor Sentiment Survey ("HISS") highlights investors' ongoing enthusiasm for the hotel sector. It shows that globally buyers outnumber sellers by almost 4:1, and all three regions look set to remain markets in which sellers should be in control and can expect higher prices. The survey also shows that 23.4% of respondents are now expecting to build hotel assets, indicating that investors are being pushed to consider development due to the shortage of available investment stock.
Arthur de Haast continued: "With continued confidence in trading performance we are expecting balanced growth going forward. Our survey results demonstrate that globally yields are still tightening although investors' expectations for leveraged IRRs have increased slightly as interest rates continue to rise. 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."
About 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 2006, Jones Lang LaSalle Hotels provided sale and purchase advice on 186 hotel transactions globally; representing a combined value of US$9.3 billion, a total of 43,272 hotel rooms in 78 cities. In addition advisory and valuation services were provided on 589 assignments globally for 136,270 rooms across approximately 280 cities. The global team comprises 210 hotel specialists, operating from 24 offices in 14 countries. The firm's advice is supported by a dedicated global research team, which produced over 45 publications in 2006 in addition to bespoke 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