Signs point to a continuing strong hotel transactions market in 2014, so buyers and sellers are identifying trends and implementing strategies to take advantage of financing and market strength while times are good. Suril Shah, head of North America hospitality acquisitions for Starwood Capital Group, summed it up by saying, ?it?s time to take a bold step with your portfolio.?
?Transaction volume in 2013 was way up, and now we?re looking at a 10- to 15-percent increase in [global] transaction volume in 2014, even with Asia dipping,? he said. ?People with assets will benefit.?
Strong demand for hotel rooms is the first factor pointing to a good lending environment. ?Hotel demand is highly correlated with GDP growth,? said Deric Eubanks, SVP of finance for Ashford Hospitality Prime. ?GDP growth now is reasonable, allowing hotel demand to continue to grow.?
Low interest rates also play into this equation. Christopher Jordan, EVP of Wells Fargo Real Estate, said the slow-but-moderate GDP growth plus what he called ?abnormally low? interest rates ?may be a blessing.?
WHO?S BUYING?
While distinct types of buyers have dominated parts of the cycle in the past, it really is a mixed bag right now. Certain trends do apply, but experts say there is hotel product for every type of interested investor. ?Private equity is focused on existing product right now,? said Joel Eisemann, CDO of the Americas region for InterContinental Hotels Group. ?Right now you?ll get the best pricing on existing hotels. A lot of [owner/franchisees] are selling assets to private equity and using that cash to build new product.?
Eisemann and Liam Brown, president of the U.S. and Canada select service & extended stay lodging and owner & franchise services, The Americas, for Marriott International, agreed that buyers clearly are looking ahead to their exit strategies, and institutional-quality assets with strong brands will sell easier down the road.
Click here to read more.
Source: Stephanie Ricca (2014). Good lending environment upcoming?time to take advantage, Hotel Incestment News published Apr, 2014. Viewed Apr 28, 2014.