Likely Targets for Hospitality Investments in 2008
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Likely Targets for Hospitality Investments in 2008
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Category: Worldwide
This is a press release selected by our editorial committee and published online for free on 2008-03-25
Even with the dramatic shift in the debt markets over the last few months, hotel industry sector fundamentals continue to be strong.
Emerging markets in Asia are unseating Europe as the epicenter of new hospitality investment and development while investors in the US are switching their focus from the acquisition of existing hotels to developing new properties. And according to more than 300 investors and industry executives worldwide in our recent hospitality survey, cap rates are likely to stabilize, and possibly even increase over the short- to mid-term in the US. With key influences affecting the US hospitality sector, which include the credit crunch, a weak US dollar, green building, globalization and rapidly shifting demographic trends, we offer some fundamental insights into the industry as well as detailed analysis on the shifts occurring in hospitality investments:
* In the US, the perception of hospitality real estate is that it’s generally overvalued, highlighting the importance of comprehensive due diligence
* Greater interest has been exhibited in deals outside the US over near to medium term
* While the established economies of Europe have previously been the main focus of the investment strategy, respondents clearly favor the emerging markets of Asia for offering upside potential
* US investment strategies indicate a transition from acquisitions to developments
* The greatest interest over the short-term will be in luxury, upper-upscale, and upscale segments, respectively
* The biggest risk factor to international hospitality investments is political and economic instability
To learn more about our key findings on the hospitality investment community, download the “Ernst & Young Hospitality Investment Survey” (pdf, 661kb), “Hospitality Top 10 Thoughts for 2008” (pdf, 153kb), and the “US Lodging Report” (pdf, 3.44mb).
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