Worldwide Hotel Transaction Volume to Reach $32 Billion in 2013

Jones Lang LaSalle's Hotels and Hospitality experts expect worldwide hotel deal volume to reach $32 billion in 2013, as increased transparency around the world gives way to a more globalized arena for investors.

As the investment landscape continues to transform, a strong bench of buyer groups will remain interested in acquiring assets, according to initial results from Jones Lang LaSalle's annual Hotel Investment Outlook report, to be released in late January. Cross-border capital, which accounted for 30 percent of global hotel investment in 2012, could also accelerate in 2013.

Of the active players, private equity investors will continue to lead the pack, being in the favorable position of achieving opportunistic returns through their significant buying power and risk tolerance. REITs, net buyers throughout 2012, will continue to make headline acquisitions of core properties in gateway markets.

This is particularly true in North America and Asia Pacific where two new hotel REITs in Singapore have been listed. Funds from the Middle East will continue to scour the globe for trophy assets looking for opportunities to export capital in 2013.

The global availability of debt is expected to be at the highest level in 2013 since 2007, notwithstanding regional variances. Large banks, traditionally key providers of real estate debt financing, don't have sufficient balance sheet capacity to lend significant sources of new money. Sovereign wealth funds, mutual funds and insurance companies, however, will fill the gap as providers of senior and in some instances mezzanine debt.

Hotel operating fundamentals are generally holding strong, and in some cases are outperforming expectations, given the economic pressures. At the forefront of growth in revenue per available room (RevPAR) in 2013 are the world's gateway and resource-rich cities, which underscore the attractiveness high-quality, income-producing hotel real estate provides as an asset class. Global travellers will boost demand and average room rates in markets such as Istanbul, Munich, San Francisco, Boston, Sydney and Singapore, which have already enticed investor interest and will be the markets to watch in 2013.

Transaction levels, capital values, hotel trading fundamentals and rents are generally improving against a backdrop of downward revisions to economic growth. However, given the amount of stimulus that continues to be injected into the world economy, economic growth rates in the coming years are expected to slowly improve.

Jones Lang LaSalle's Hotels & Hospitality Group serves as the hospitality industry's global leader in real estate services for luxury, upscale, select service and budget hotels; timeshare and fractional ownership properties; convention centers; mixed-use developments and other hospitality properties.

The firm's more than 265 dedicated hotel and hospitality experts partner with investors and owner/operators around the globe to support and shape investment strategies that deliver maximum value throughout the entire lifecycle of an asset.

In the last five years, the team completed more transactions than any other hotels and hospitality real estate advisor in the world totaling nearly US$25 billion, while also completing approximately 4,000 advisory and valuation assignments. The group's hotels and hospitality specialists provide independent and expert advice to clients, backed by industry-leading research.