Illiquid credit markets in the U.S. and growing economic uncertainty are taking a toll on hotel transaction volumes and investor buoyancy. Jones Lang LaSalle Hotels' recently released Hotel Investor Sentiment Survey ("HISS") highlights investors' trading performance expectations in the current debt market environment.
"Across the Americas, the net balance of investor's short term trading performance expectations turned negative for the first time since 2003, but the medium term sentiment remained almost unchanged from six months ago - at 24.2%," said Arthur Adler, managing director and CEO-Americas for Jones Lang LaSalle Hotels.
New York and San Francisco displayed the most positive short term outlook in the U.S., with the highest percentage of investors expressing confidence in these markets over the next six months (30.3% and 18.5%, respectively). "The medium term trading performance outlook is most optimistic for key gateway cities with strong international demand such as Boston, Chicago, New York, San Francisco, and Washington D.C.," said Adler. Short term trading sentiment for is lowest for Orlando, Atlanta and Dallas - markets that may find it more difficult to absorb their new supply.
Canada's future trading outlook exceeds the Americas average. While the short term outlook also decreased from six months ago, the positive medium term sentiment in Canada increased to 37.0%, indicative of increased investor opportunities. Investors in Mexico are once again most bullish on Los Cabos, reporting a positive medium term trading sentiment of 44.7%.
Markets in South American lead the trading performance expectations in the Americas, say investors. "Having achieved investment grade, Brazil will increasingly attract attention and investment from private equity groups and institutional investors," said Kristina Paider, senior vice president of research and marketing for Jones Lang LaSalle Hotels. "Respondents indicate that short term trading performance sentiment is highest in Sao Paulo (24.1%), followed by Rio de Janeiro (17.9%). In the medium term, trading performance expectations for these markets jump to 37.0% and 30.8%, respectively."
Investors across the Americas have adjusted their short term (six month) expectations as economic pressures and high oil prices affect hotel demand fundamentals. The mostly unaffected medium term (two years) performance sentiment is a more positive sign, however. "Several large hotel transactions over the past few months have shown that investors remain interested in the sector and the debt markets are open to finance high quality assets in prime locations," said Paider.
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 235 hotel specialists, operating from 27 offices in 16 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