US Realty Consultants, Inc. has released its Mid-Year 2014 Hotel Investor Survey, which the company has provided for over twenty years. Given the ever-changing economic outlook, it continues to be remarkable how stable hotel investment parameters have remained over the past year.
The overall news in the Mid-Year 2014 USRC Hotel Investment Survey remains positive, and remarkably consistent with recent surveys. Overall discount rates (yield) have now been essentially flat to slightly declined for over ten quarters, and still remain quite strong by longer historical standards. With the current survey, overall going-in capitalization rates also held flat to slightly improved, as expectations for revenue growth once again exceed expense growth expectations.
More specifically, in the current survey, full-service capitalization rates remained flat, while limited-service going in rates dropped by 20 basis points. As yield requirements remain low, anticipated revenue growth (reflected by ADR expectations) continues to exceed expense growth estimates, indicating continued expectations of NOI recovery, which leads to "forced down" going in rates relative to yields.
The complete survey, including data on capitalization rates, discount rates, ADR and expense growth expectations, marketing time, and other data for both full-service and limited-service hotels, can be ordered through the company's website at www.usrc.com, and clicking "Publications."
Jeffrey H. Walker, MAI, CRE is Principal and Managing Director of US Realty Consultants. He is a 1985 graduate of James Madison University and has been involved in the hotel and restaurant industries since the 1970's. He spent much of his early career with Hyatt Hotels and Resorts, and has been a hotel consultant since 1992. He is involved with hundreds of hotel analyses annually for national lenders and major institutional clients, and is a frequent speaker at national conventions.