Report: lodging stocks bounce back after Sept. 11.

Global lodging stocks appear to have regained most of the value lost in the months, following September 11. Jones Lang LaSalle Hotels looks at the global experience in the latest edition of Hotel Topics, entitled "Public and Private Hotel Investment."

Post Sept. 11, lodging stocks worldwide plummeted: in the US stocks registered falls of as much as 50%; in the Asia Pacific of 20-30%, and in Europe, of approximately 20%.

"The good news, however, is that since this time many of the stocks across the globe have traded up," said Arthur Adler, CEO and managing director, Jones Lang LaSalle Hotels, Americas.

Below is a performance overview of hotel stocks in the world's major regions:

* UNITED STATES. After falling by as much as 50% immediately following the attacks of Sept. 11, U.S. hotel stocks have appreciated significantly. Looking forward, analysts see plenty of upside potential and therefore remain bullish on, the overall sector.

"We believe we have entered the early stages of economic recovery. Looking forward we expect demand to accelerate, supply growth to slow and RevPAR to trend upwards," said Art Buser, Managing Director and Head of West Coast Operations of Jones Lang LaSalle Hotels. "Now is considered to be a good time to by lodging stocks here in the US."

* Asia Pacific. The impact of Sept. 11 on Asia Pacific lodging stocks was profound, however since December most have rallied and in some cases surged well beyond pre-Sept. 11 levels. With the majority of Asia Pacific markets in the late downturn/early recovery stage of market cycle, revenue per available room (RevPAR) is expected to remain flat in 2002. According to David Gibson, CEO and Managing Director of Jones Lang LaSalle Hotels, Asia Pacific, more robust growth is expected in 2003 driven by US led regional recovery.

Analysts remain positive toward stocks with exposure to key China markets, which should benefit from World Trade organization entry and continued robust economic growth. Shangri-La Asia's exposure in China is largely responsible for an impressive stock rebound, up 23.4% from September 10 levels.

City Developments, Hong Kong & Shanghai Hotels and Raffles Holdings are trading at premiums of 19.3%*, l1.3%* and 8.6%* respectively from September 10 levels.

Not faring so well is Mandarin Oriental International, hit by a higher exposure to the US and, European markets and low liquidity compared relative to its competitive set. Mandarin's stocks remain at a discount, currently of 24.4%* from September 10 levels.

Poor performance of the Australian listed hotel property sector has cast the sector out of favor for some time. In 2001, the sector was already suffering from the fall-out of Ansett Airlines' demise and the soft domestic hotel market. September 11 added to this bearish outlook.

This negative sentiment is evidenced in the privatization of Australia's third major hotel trust Tourism Asset Holdings. "'Unless share .prices improve, further consolidation and/or privatization may occur" said Gibson.

Slowing supply growth is one of the major factors contributing to this sentiment. Jones Lang LaSalle Hotels forecast a 1.2% supply increase during 2002 -- a dramatic decline of the long term historical development activity. Plus, most operators have announced significant cutbacks in project commitments in 2002" said Adler.

Other factors include improved corporate demand and the success of cost-cutting measures, which are likely to improve the sectors' long term efficiency.

* Europe. Most European listed lodging stocks recovered to pre-September 11. levels in early March 2002. "We expect the European market to trough in first quarter 2002 and then benefit from the economic recovery in the second half of 2002" said Arthur de Haast, CEO and Managing Director, Jones Lang LaSalle Hotels, Europe.

Quoted hotel companies with higher exposure to the US and major European gateways were already feeling the pressure of the US economic slowdown prior to September 11. The disruption triggered by the events of September 11 caused significant concern that full year results would suffer an enormous decline. For the majority, however, the double-digit growth recorded in many major markets during the first eight months of 2001 insulated year-end results.