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Hotel investors express renewed confidence in lodging market
Research - JANUARY 23, 2018

Hotel investors express renewed confidence in lodging market

by Andrea Zander

Hotel investors are more confident about the lodging sector now than they were in late 2016, according to new research from JLL.

The firm’s North America Hotel Investor Sentiment Survey collected more than 5,000 data points from hotel investors to measure their expectations for 2018.

“Investor sentiment notched a notable increase in early 2018, resulting in a more optimistic environment than we’ve seen in a number of quarters,” said Arthur Adler, Americas chairman at JLL’s hotels & hospitality group. “Strong RevPAR trends, a robust macro economy, the rising stock market, and corporate confidence from tax reform and other governmental initiatives have helped fuel investors’ confidence. In addition, hotels provide favorable strong risk-adjusted returns and a hedge against inflation.”

Investors expressed a more confident outlook for three-quarters of the North American markets in the survey, versus one year ago. Los Angeles, Washington, D.C., and San Francisco received the most positive performance expectations, followed by Boston, Vancouver and Hawaii.

Unprecedented nine years into a cycle, target cap rates marked further tightening in the survey. Furthermore, the share of investors who expect cap rates to rise during the next six months decreased by 7 percentage points. Strong asset valuations are affirmed as average price-per-key valuations hold firm or even tick up.

“It’s encouraging that after the ninth consecutive year of RevPAR growth, the hotel investment community is expressing a renewed vigor,” said Lauro Ferroni, global head of research for JLL’s hotels & hospitality group. “As the buyer pool for hotels remains diverse, we’re optimistic about transaction volumes for the year.”

To download JLL’s North America Hotel Investor Sentiment Survey, visit https://www.jll.com/research/199/north-america-hotel-investor-sentiment-survey-jan-2018-jll.

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