In its latest report on the global lodging industry, Jones Lang LaSalle Incorporated (JLL), a leading real estate investment trust (REIT), has anticipated hotel sales and acquisitions to increase in the range of 15% to 20% year-over-year to about $30 billion in 2011. Jones Lang further anticipates that transaction volume would increase the most in the EMEA (Europe, Middle Eastand Africa) region to the tune of as much as 25% in the current fiscal.
Hotel purchases had earlier fallen to a nadir of $9 billion in 2009 from its peak value of $120 billion in 2007, before rising to a decent tally of $26 billion in 2010. The report has cited a healthy rebound in the business and leisure travel to be the primary raison d’être for the turnaround of the industry.
Of late, the hotel industry has witnessed a significant surge in occupancy and room rates as customers have loosened their purse strings. According to Smith Travel Research Inc., an independent research company in the lodging industry, hotel revenue per available room (RevPAR) in the top 25 U.S. markets rose to $76.61 during the first 11 months of 2010 from $71.55 in the year-ago period.
This has attracted a wide array of investors to the hotel industry, including investors from the Middle East. Jones Lang expects REITs to be the dominant buyers in 2011, with private equity groups and institutional investors increasingly joining the party as leverage levels and terms pick up with improving market fundamentals.
In concurrence with the recent developments in the industry, Sunstone Hotel Investors Inc. (SHO), a lodging REIT, had announced its plans to acquire premium hotels across the U.S. worth approximately $1 billion. The company is mulling to buy upscale hotels of 400 rooms or larger in 2011 in major cities on the East and West coasts of the U.S. The acquisition spree is part of the long-term strategy of the company to own assets in some of the premium markets of the country at discounted prices as property prices has nose-dived in the last couple of years.
The Jones Lang report provides valuable insights to the hotel industry and envisions the emerging markets of China and India as one of the most active global markets in 2011. Jones Lang continually invests in industry-leading research to identify emerging trends and anticipate future conditions to respond to the shifting market and business trends of its clients.
This enables the company to develop new investment products and services tailored to the specific investment goals and objectives of its clients, thereby maintaining profitable long-term relationships during challenging market conditions.
Jones Lang provides corporate, financial and investment management services to corporations and other real estate owners, users and investors worldwide. The company operates as a single-source provider of real estate solutions with a broad range of real estate product and services, and an extensive knowledge of domestic and international real estate markets. We maintain our ‘Neutral’ rating on Jones Lang, which presently has a Zacks #1 Rank translating into a short-term ‘Strong Buy’ recommendation.
JONES LANG LASL (JLL): Free Stock Analysis Report
SUNSTONE HOTEL (SHO): Free Stock Analysis Report
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