The hotel investment sector has a strong outlook for the year ahead. Strengthening fundamentals are leading to increased transaction volume. Check out the top five signs of a healthy investment market for 2014.

1. U.S. Lodging Sector’s 2014 Wellness Check
The hotel investment sector has a strong outlook for the year ahead. trengthening
S
fundamentals are leading to increased transaction volume. ere we outline the top
H
five signs of a healthy investment market for 2014.
Increased liquidity of hotel investments
30
25
Volume ($B)
20
Key drivers
Americas hotel transaction volume
2008 - 2014F
Increasing operating fundamentals
63% occupancy forecast for 2014
Portfolio transactions
Single asset transactions
15
Strong debt market
175% increase in CMBS issuance
since 2012
$27-28
10
5
Abundance of equity
Lodging stock issuance has
increased 20% annually since 2010
0
Top 5 largest single asset transactions in 2013
Sale date
Hyatt Regency Orlando, FL
Helmsley Park Lane New York, NY
Hyatt Regency Waikiki, HI
Atlanta Marriott Marquis, GA
Hyatt Regency San Francisco, CA
Oct-13
Nov-13
Jul-13
Jan-13
Dec-13
Price ($M)
Rooms
$717.0
1,641
$660.0
606
$450.0
1,229
Undisclosed 1,663
$293.0
802
Top 5 largest portfolio transactions in 2013
Waldorf Astoria Three-Hotel Portfolio
Apple REIT Six and Blackstone 66-Hotel Portfolio
Omni Five-Hotel Portfolio
InTown Suites Starwood Capital 138-Hotel Portfolio
MCR Marriott Hilton 26-Hotel Portfolio
Sale date
Price ($M)
Rooms
Feb-13
$1,338.6 2,316
May-13 $1,189.8 7,658
Jun-13 Undisclosed 2,356
Jun-13
$735.0 18,000
Oct-13
$430.0
3,002
2014 supply growth below average
Supply pipeline in the U.S. is below the nation’s
long-term average of 2% per year - this will
underpin the performance of existing hotels.
Room supply pipeline through 2015
as proportion of existing stock
Chicago
3.0%
North Dakota witnessed the fastest supply
growth of all states in 2013 at 7% of existing
supply due to growth in crude oil production.
2014 supply growth is forecasted at 4.5%.
New York
12.6%
Washington, D.C.
San Francisco
3.3%
0.8%
Los Angeles
1.7%
Miami
6.8%
Percent above/below previous RevPAR peak
Continued RevPAR growth
40%
2/3 of U.S.
U.S. RevPAR performance since previous peak
markets have seen
RevPAR levels
rebound to the
previous peak.
30%
Markets with strong
upside potential
20%
10%
0%
-10%
We expect continued
RevPAR growth of
Strong RevPAR
performers in 2013
-20%
5-6%
in 2014, driven by
ADR growth.
Source: Smith Travel Research, Jones Lang LaSalle
Resorts have ample runway
for value increase
Off-shore investment to rise by 50%
Asian and Middle Eastern investors are expected to invest
$3 billion in U.S. hotels in 2014.
National average transactions
(price per key - indexed to peak)
May 2007 - present
Off-shore investment
into U.S. hotels averages
5-10% of total,
but growing rapidly.
1.00
Off-shore investment into U.S. hotels
since 2011 ($M)
China
Hong Kong
India
Middle East
Other Asia
Southeast Asia
National Average
Price per Key
556.8
1,400.5
946.5
1,012.5
470.0
Given off-shore investors’ lower leverage levels, their purchases
represent
Resorts Average
Price per Key
10% of equity placed in U.S. lodging sector.
Opportunistic investors:
Resorts are currently
transacting, on average, at
20% below peak values.
Resort sales are up - 2013
resort transaction volume was
$5 billion, versus $1.5 billion
in 2012.
What’s the prognosis?
The Americas lodging sector is healthy and on track for a growth spurt in 2014 with transaction volume expected to increase
15% over 2013 levels. Also, with continuing RevPAR growth, hotel values will increase. There are still value-add opportunities
in certain markets. Furthermore, off-shore investors will actively pursue a larger presence in gateway markets, such as Los
Angeles, San Francisco and New York.
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from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.