Jones Lang LaSalle Hotels estimates that $110 billion (c. €75bn) 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 $72.5 billion (c. €49bn), proving that investors' appetite for the hotel sector remains at an unprecedented high level.
Arthur de Haast, Global CEO of Jones Lang LaSalle Hotels, said, "Global hotel deal activity to June has already reached $56 billion (c. €38bn), 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.
"With continued confidence in trading performance we are expecting balanced growth going forward," De Haas continued. "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."
Source: Jones Lang LaSalle