Investors pessimistic about short-term hotel prospects.Investors are pessimistic on the short-term performance of the hotel sector, 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. Jones Lang LaSalle Jones Lang LaSalle (NYSE: JLL) is a major real estate and money management services firm headquartered in the Aon Center in Chicago, Illinois and the only company in its industry making it into Fortune magazine's list of the 100 Best Places to Work in the U.S. Hotels' Hotel Investor Sentiment Survey (HISS), the only global hotel investor survey which targets 1,800 of the largest investors and or owners of hotel/resort properties. However, investors are confident that this downturn will be short lived and are optimistic for the performance outlook in the medium term. Within two years, all markets, led by Europe and the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , are expected to return to pre-2001 levels. "Investors have clearly voiced their change in sentiment for the hotel sector across the Americas, as the impact of the recession and terrorist attacks is absorbed," said Arthur Adler, managing director and CEO-Americas, of Jones Lang LaSalle Hotels. There has been a sharp shift in the short-term outlook for occupancy and room rate to strongly negative, although investors are confident with regard to the medium term outlook. The strongest negative sentiment was found in the leisure markets of Hawaii and Orlando. This is especially true for Hawaii given its high dependence on air travel. San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden was ranked as the third worst performer, reflecting the additional weakness of its exposure to the emaciated e·ma·ci·ate tr. & intr.v. e·ma·ci·at·ed, e·ma·ci·at·ing, e·ma·ci·ates To make or become extremely thin, especially as a result of starvation. high tech market. Opinion is also firmly negative for New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Boston and Chicago's short-term trading performance. Of the 20 Americas markets analysed, Washington, D.C. has the most moderate negative sentiment in the short term -- not surprising given the significant rebuilding, political and defence activity occurring in this city and the limited supply in the pipeline. Investors remain bullish on the medium-term trading expectations of all markets throughout the Americas. In particular, New York and Washington, D.C. were ranked by virtually all respondents as having a positive outlook over the next two years. Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , Boston Chicago, and Hawaii are the other top performing U.S. markets over the medium term. "Despite an apparent firming of leveraged IRRs, the concurrent reduction in interest rates over the same period suggests there has been an actual decline in required IRRs," said senior vice president Melinda McKay of Jones Lang LaSalle Hotels. "Cap rates have changed little across the region during the last six months, implying investors are looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. deep discounts." As future earnings expectations have lowered, U.S. investors demand a greater return to offset the perceived higher risk of hotel investment. Key U.S. gateway cities The Gateway Cities of Southern California are those located in southeastern Los Angeles County. There is some cross-over between these cities and those composing South Los Angeles, East Los Angeles, the South Bay, and the San Gabriel Valley. such as New York, Chicago, Boston, Washington and San Francisco all have comparatively lower IRR IRR In currencies, this is the abbreviation for the Iranian Rial. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. requirements, while the Latin American markets of Buenos Aires Buenos Aires (bwā`nəs ī`rēz, âr`ēz, Span. bwā`nōs ī`rās), city and federal district (1991 pop. , Sao Paulo and the Caribbean all have the highest IRR requirements given their higher risk profile. "We have also seen very little shift in the cap rate requirements for new acquisitions over the previous survey. This implies that investors are looking for deep discounts; however, there are few distressed assets available at similar discounts to replacement cost that occurred in the early 1990s," included McKay. In all but two cases, investors expect cap rates to soften (increase) in the short term, indicative of the expectation of further declines in revenue. Los Angeles and New York were the two exceptions, mainly attributed to investors' perceptions that the markets have already bottomed. Gearing ratios have become more conservative across the Americas, particularly at the corporate borrowing level. Only 27% of investors (at the corporate borrowing level) have a gearing ratio of more than 50%, with the majority in the range of 41%-50% gearing. Compare this to the 44% of borrowers above the 50% mark during the previous survey only six months ago. The Sept. 11 attacks were considered to have accelerated the movement toward the trough of the cycle, which had already begun in the early part of 2001. Investors placed Hawaii and Miami at the early downturn phase, suggesting that they believe these markets still have further downside risk Downside Risk An estimation of a security's potential to suffer a decline in price if the market conditions turn bad. Notes: You can think of this as an estimate of the amount that you could lose on a stock or other investment. . Investors see value in Los Angeles, Toronto, Phoenix, Washington, D.C., Hawaii and San Francisco, which were all ranked by more than 40% of respondents as having a buy rating. Unfortunately, on average only 5.9% of investors indicated an intention to sell. In the United States' five key "24-hour" markets (New York, Boston, Washington, Chicago and San Francisco), the sell intent ranged from 0-3%, quite different to the ratio two months ago of between 4-13%. |
|
||||||||||||||||||||

Printer friendly
Cite/link
Email
Feedback
Reader Opinion