A new survey by Jones Lang LaSalle Hotels projects that $48 billion in U.S. hotel sales could be completed by the end of 2007. If that volume were achieved, it would represent the fourth consecutive year of record sales volume and a 37% increase from the 2006 volume of $35 billion.
“U.S. hotel activity to June has already reached $32 billion, higher than we initially predicted,” says Kristina Paider, senior vice president of research and marketing for Jones Lang LaSalle Hotels. “One half of the sales of this period were driven by REITs being taken private, and another third was private equity groups buying up real estate as well as management and brands, as seen with Blackstone’s recent purchase of Hilton Hotels Corp.”
According to Jones Lang LaSalle Hotels, for every five buyers of North American hotel assets there are only two sellers. And in 26 of the 29 surveyed markets, too, upscale hotels were the assets of choice. Another finding: Nearly 19% of respondents now expect to build hotel assets, suggesting that investors are being pushed to consider development due to the shortage of available stock.
“With continued confidence in trading performance we are expecting balanced growth going forward,” says Arthur Adler, managing director and CEO of the Americas for Jones Lang LaSalle Hotels. “While the credit markets are showing signs of weakness, the strength of the economy, resulting in increased business and leisure travel, combined with constrained supply will continue to create an attractive investment environment.”