Investors find hotel market looking better.The hotel market is looking better to investors, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the most recent survey of investors seeking hotel acquisitions. The third quarter Korpacz Real Estate Investor A real estate investor is someone who actively or passively invests in real estate. An active investor may buy a property, make repairs and/or improvements to the property, and sell it later for a profit. Survey - Hotel Market Report conducted by Coopers & Lybrand L.L.P. shows an improving national hotel market. Most investor interest has taken place in the full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. and economy/limited-service segment, but the outlook for luxury hotels also appears bright. Full-Service Hotels Seeing Increased Investments Investment activity in the full-service market continues to spread, with the number of investors seeking acquisitions increasing, the survey found. "Potential investors in full-service hotels believe that as the market for real estate investment trusts (REITs) continues to expand, there will be increased competition for quality assets," explains Grant Sabroff, the Cleveland-based director with Coopers & Lybrand's Hospitality Industry Consulting Services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" group who compiled the results. Sabroff notes that investment activity for full-service hotels extends from coast to coast, with several participants mentioning good opportunities in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). . He adds that the situation has evolved from a buyer's to a seller's market, with sellers holding onto properties as market performance improves and increases in value. Limited new construction, rising room demand and average daily rates, which strengthen cash flows, are also aiding the market. Investors cited the Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians , Southeast and East Coast as preferred regions for full-service hotel acquisitions. The West Coast is attracting more interest, while the Northeast continues to receive less, he notes. Sabroff predicts that the full-service market will experience more transaction activity, because relatively no new construction is anticipated within the next year. "Therefore," he suggests, "acquisitions remain the path of choice as market conditions and industry profitability progress." Limited Service Hotels are "Hot" Limited-service, particularly chainaffiliated hotels in strong markets, continue to maintain their popularity and attract investors, the survey found. Most participants report that prices/values for this type of product are climbing. As a result, many investors are pursuing development opportunities as well as acquisitions. Sabroff notes that a number of new REITS have also entered the economy/-limited service segment. At least one participant believes that REITs tend to overpay o·ver·pay v. o·ver·paid , o·ver·pay·ing, o·ver·pays v.tr. 1. To pay (a party) too much. 2. To pay an amount in excess of (a sum due). v.intr. To pay too much. for hotel assets, contributing to increasing prices/values. Most participants indicated their preference for franchised properties in strong market locations, particularly in the Southwest Southwest or south west is the ordinal direction halfway between south and west, the opposite of northeast. Southwest or south west may also refer to:
"Given the smaller initial capital outlays capital outlay See capital expenditure. relative to other hotel investment options, the economy/limited-service segment is poised to do well," says Sabroff. "As prices and values increase further, development will surely increase as well." Investors Returning Slowly to Luxury Market The large capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. , perceived higher risk and longer period required to realize investment objectives, along with the lack of available debt capital, deter many investors from the luxury market. However, this segment does seem to be gaining some momentum, although small, according to Sabroff. Luxury hotels are still valued below original construction and replacement cost, and investor competition for luxury products remains low compared to other segments, the survey found. "These conditions will increase over the next year as cash flow levels improve," maintains Sabroff. "Offshore investors, particularly Asian groups, Middle Easterners and Europeans, seek select acquisitions mainly in the top commercial centers or resort locations." Currently, investors in luxury hotels continue to search for properties that will trade at a discount from their original construction cost and that possess good potential because of more efficient management and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. improved cash flows. The Korpacz Real Estate Investor Survey interviews equity investors or their advisors in institutional-grade real estate on a quarterly basis to help determine the investment criteria and cash flow assumptions they use in analyzing real estate investment opportunities. In addition to the hotel market, the survey looks at the mall, shopping center shopping center, a concentration of retail, service, and entertainment enterprises designed to serve the surrounding region. The modern shopping center differs from its antecedents—bazaars and marketplaces—in that the shops are usually amalgamated into , office, industrial and apartment markets. |
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