Jones Lang LaSalle Hotels releases report post Sept. 11.

Jones Lang LaSalle Hotels has published the most recent version of its quarterly research report, Hotel Topics. The latest version, titled "Implications of September 11, 2001 on the Global Hotel Markets," provides cross border comparisons, variances and analyses of the impact of the terrorist attacks on the U.S., European and Asia Pacific hotel investment markets.

Although the hotel markets worldwide have undoubtedly been adversely affected by the attacks, there is underlying strength in the sector. And while the challenging market conditions present risks, there are also definite opportunities for the well-informed investor.

According to co-author Melinda McKay, senior vice president of Jones Lang LaSalle Hotels, "In the aftermath of any such calamity we will see certain emerging strengths, weakness, opportunities and threats that vary across world hotel markets. Short term, it has become clear that the United States will enter a recession, and this has facilitated a synchronized decline in other major world economies. Additionally, all world regions are experiencing a downturn, and they have experiences such as canceled conferences and conventions in common. However, differing investment opportunities have emerged throughout the United States, Europe and Asia Pacific. They range from more favorable U.S. suburban hotel markets, the popularity of European markets with rail access and the trend toward residential conversions in Australia."

In the United States, several encouraging investment-related situations will present themselves. "We are seeing a narrowing of the gap between bid and ask prices as owners in private equity markets realize 2000 was a peak in hotel values," said Arthur Adler, Americas managing director of Jones Lang LaSalle Hotels. "Also, the potential exists for a hotel sell-down by institutional investors who may find themselves overweighted in this asset class. Combine this with the historically low interest rate environment, and some counter-cyclical buying opportunities should emerge in 2002."

Apart from curtailed tourism and air travel, other obstacles that the U.S. hospitality market must overcome include stock market shocks, threats to price integrity brought on by discounted rates, and limited capital availability as some lenders balk at uncertain cash flows and values.

Co-author Anna Town, who leads Jones Lang LaSalle Hotels' European research effort, noted that the situation in the Americas has brought opportunity to some of the Continental European hotel investment markets. "Germany in particular has experienced an inflow of cash to open- and closed-ended German funds, which are obliged to place their capital and are not permitted to hold cash for long periods and. Therefore, they are actively looking for deals at the current time. Continental Europe feels more distanced from the conflict than the UK markets, thus, current levels of domestic and intra-regional travel in nations such as Germany, France and Spain remain relatively unaffected."

"As hotel markets with high U.S. exposure have been most impacted, those with a higher proportion of domestic and intra-regional European demand have been insulated to date," said Arthur De Haast, European managing director for Jones Lang LaSalle Hotels. "Although the UK is the most aligned with the United States in its military retaliation, the elevated levels of domestic travel may prompt a recovery from the ill effects of the Foot and Mouth Crisis on the UK hospitality industry."

The European hotel markets share some weaknesses with their American counterparts such as the hard-hit convention cities and airport hotels. Some Europeans are reluctant to use U.S. hotel brands due to safety concerns, which should see an increase in market share for European branded hotels. Additionally, Northern Africa and Turkish resort markets are likely to see a reduction in leisure travel due to the perceived increased safety risks.