Continued economic uncertainty, the fiscal cliff debacle and an emotional presidential campaign season have left hotel investors unfazed based on the most recent Hotel Investors Gauge, a quarterly survey from STR Analytics and HotelNewsNow.com.
Continued economic uncertainty, the fiscal cliff debacle and an emotional presidential campaign season have left hotel investors unfazed based on the most recent Hotel Investors Gauge, a quarterly survey from STR Analytics and HotelNewsNow.com. Most underwriting parameters for buyers and developers were relatively unchanged based on participants’ responses.
STR Analytics questioned investors regarding their 2013 outlook for occupancy and average room rates. For occupancy, 40 percent of investors expect occupancy to continue to grow, while 53 percent believe occupancy is already near its peak level. Investors’ outlook for room rates is far more defined.
“The biggest question regarding the pace of recovery for the overall industry has been the ability to gain momentum in growing room rates,” said Steve Hennis, director at STR Analytics. “However, based on the Hotel Investors Gauge, 80 percent of respondents believe that rate growth in 2013 will continue at its current pace between 3 percent and 5 percent. Despite record demand levels and minimal supply growth, we do not yet appear to be at a point where rate growth will escalate.”
Key findings from the Hotel Investors Gauge include:
• The median capitalization rate on trailing 12-month net income for stable assets remained relatively flat since the Q2 Hotel Investors Gauge at 8.6 percent.
• Investors’ return expectations also remained stable since the Q2 survey. Expected leveraged returns for investors averaged 18.6 percent.
• Developers’ return expectations rose slightly to 22.2 percent, perhaps indicating a higher perceived risk in future years as supply growth is expected to increase.
The Hotel Investors Gauge includes a broad spectrum of hotel investors and developers. The survey is conducted on a quarterly basis by STR Analytics and HotelNewsNow.com.
For full survey analysis and results, please visit www.HotelInvestmentBarometer.com. The Hotel Investment Barometer provides subscribers with the latest hotel real estate transaction news, the status of two dozen metrics that real estate pros need to know, and it includes lists of the latest transactions, hotel openings, signed management contracts and more. The Hotel Investment Barometer is a paid subscription e-newsletter that is delivered on the second and fourth Tuesday of each month.
About STR Analytics
STR Analytics offers the unique combination of experienced lodging industry experts augmented by the unparalleled international database compiled by STR. STR Analytics’ unique resources enables the company to offer products and services to hotel owners, operators, brands, independents, lenders, investors, servicers, regulators and consultants that provide complete information regarding a particular property, portfolio, market or transaction. STR Analytics, located in Boulder, Colorado, is a division of STR and is associated with HotelNewsNow.com, STR Global and RRC Associates. For more information, visit www.STRAnalytics.com.
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