‘Buy’ signals around the world have increased to the highest level since 2005, suggesting more hotel investment transactional activity ahead, according to new research from Jones Lang LaSalle Hotels.
Globally investors’ short-term performance expectations have improve but at the expense of medium-term outlook as global hotel markets adapt to continuing economic uncertainty. Meanwhile sentiment is divergent by region.
Trading sentiment in the Americas has improved considerably in the last six months, while the mood in Asia Pacific is more mixed. EMEA remains pessimistic with a more challenging macroeconomic environment.
Americas
In the Americas, short-term investor sentiment has reached its highest level since mid-2007 as both lodging fundamentals and deal velocity maintain strong momentum.
Indeed, U.S. cities are seen as best locations to buy globally, with only Istanbul matching their appeal. Investor sentiment is highest for major gateway markets. San Francisco, Los Angeles, Boston, Miami and New York exhibit the most positive hotel performance sentiment in the U.S. over the next six month and two-year periods, driven by rising corporate and group demand along with high levels of international visitation.
Buenos Aires, Argentina, exhibited the most negative short-term performance expectations of all Americas markets. The responses reflect that the country’s economic growth is slowing following two years of high growth, and there is a risk that elevated inflation will hamper business investment and consumption.
EMEA
In EMEA, despite economic challenges in the Eurozone, performance expectations remain in positive territory.
Investor sentiment is highest for major gateway markets including London, Paris, Munich, Hamburg, Istanbul and Moscow. In the U.K., weak economic conditions continue to hamper a rebound in trading performance. Short-term trading expectations for markets in Southern Europe have weakened and were particularly negative for Madrid and Lisbon.
In the Middle East and North Africa, the outlook still remains slightly negative for the short and medium term. An improvement in sentiment is largely due to an overall stabilization in the region since the Arab Spring and tourist flows have started to return to countries such as Egypt and Tunisia.
Asia Pacific
In Asia Pacific short-term sentiment has dipped to a three-year low, weighed down by outlook for China and India while Southeast Asian markets emerging as bright-spots.
The strong income growth that has been recorded across the region over the past few years is starting to abate as demand has moderated resulting in RevPAR growth slowing or declining in some markets. While investors still expect growth, rates of change will be lower and less uniform.
Phuket, Thailand, is the most highly sought Asia Pacific hotel market for acquisitions, whereas Bali is being targeted by investors for development with build sentiment the highest for any of the 93 markets JLLH tracks globally.
Indonesia is booming. By 2030, it is projected to have the seventh-largest economy, overtaking Germany and the United Kingdom. The archipelago nation is also urbanizing rapidly, boosting incomes and consumption rates. By 2030, Indonesia is expected to have added 90 million people to its consuming class — more than any other country except China and India. This backdrop is providing a boon for hotels with double-digit RevPAR growth across all segments in Jakarta over the nine months to September 2012 being some of the strongest in the region and with the market trading well above previous peaks.
On the contrary, investor trading sentiment has moved to negative for China’s hotel market.
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