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Hotels expert firms shared insights into what they perceive as continued indicators for investment growth in the hospitality and lodging industry. However, others suggest that the economic uncertainty during these same periods of projected investor growth continues to prevail given the state of the domestic and international travel markets. According to the panel at the Hotel Data Conference: “The much-discussed “fiscal cliff,” which would see a number of tax increases and spending cuts go into effect at the beginning of 2013in the United States, is not a concern among the investment community. However, the event will be tabled and pushed back to 2014, regardless of which nominee is elected president in November said one hotel expert.” At the same event, hotel investment advisors talked about the hold period for hotels is now between 5 to 6 years and the cap rate on trailing twelve months of income is now running about 8.5%. This is certainly lower than a few years ago where estimates for those same capitalization rates were closer to 10% industry wide. Some of this rise in valuations has been driven by REITs who continue to be one of the strongest buyers and investors in hotel real estate. Still, if you are a hotel asset manager overseeing branded hotels, expect to spend more in capital. More franchisors are demanding that PIPs ((property improvement plans) must be brought current by owners and operators going forward into 2013. Hotel expert firms also say this industry average has climbed from to $20,000 to $25,000 per room since 2011.
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