Despite political gridlock in Washington, D.C., and some concerns about economic growth, an extraordinary number of U.S. hospitality executives expect their industry to perform well in 2013, according to DLA Piper’s 2013 Hospitality Outlook Survey.
The survey, measuring the attitudes and perspectives of top executives within the hospitality industry, revealed 84% of respondents describe their 12-month outlook for the U.S. hospitality industry as “bullish,” the highest recorded since 2011 when 88% of respondents described themselves as bullish.
According to respondents, fueling their optimism is confidence that the broader U.S. economy will continue its steady, albeit modest, growth. Others cite increased growth in business and convention-related travel, as well as projected strength for hotel transactions.
On the other hand, political gridlock in Washington is tempering executives’ enthusiasm. When the survey was conducted in December, more than half of respondents believed that the “fiscal cliff,” if not averted, would be a significant deterrent to deal making in 2013. Even after a deal was reached, many respondents said the deal had failed to decisively solve the country’s fiscal problems.
Other interesting conclusions from the survey include:
- 82% of respondents expect hotel asset values to trend upward or slightly upward in 2013, compared to 47% of respondents in 2012 who noted that they expected hotel assets to rise in the year ahead.
- In a slight drop, 85% of respondents believe market conditions have created good buying opportunities for well-capitalized investors, down from 91% last year.
- The upscale market remains the most attractive opportunity, according to respondents. The midscale market remains their second-most attractive opportunity.
- While private equity is once again seen by most executives as the most active type of hotel investor in 2013, the portion of respondents who insist foreign investors will lead the way has doubled, to 20%.
- Commercial lenders will be the most active type of lender, say 43% of respondents, up from 34% last year.
- Respondents believe Brazil remains the most attractive opportunity for outbound U.S. investors. Brazil received 35% of the votes, with China placing second, at 25%.
- Spain has replaced Italy as the European country most likely to experience economic problems — 43% of respondents cite it, while only 16% cite Italy, nearly a reversal of last year’s numbers.