Sorry, but there are virtually no markets truly “under the radar.” The mere scale of competition for good deals has investors shopping everywhere from Madrid to Milwaukee, Wisconsin—and expecting to get equally good returns on the right deal in the right markets for them.
In a few cases, investors have a must-have location. Generally, though, the answer to the “what’s hot” in 2015 will be as much about the individual asset as the locale. Here is what industry experts told HOTELS’ Investment Outlook.
HOTELS’ Investment Outlook: Where are the red-hot markets for 2015?
Peter Willis, CIO, Chatham Lodging Trust, Palm Beach, Florida: Job growth and migration patterns in the U.S. are making the Seattle/Pacific Northwest, Bay Area/Silicon Valley, Houston/Dallas areas hot right now. Miami/Miami Beach is also quite hot because of increasing visitation, less seasonality and less price sensitivity from guests.
Trevor Ward, managing director, W Hospitality Group, Lagos: Angola, Ghana, Nigeria, Ethiopia, Tanzania, Kenya, Mozambique all have greater scale than most other African countries, with diversified (or diversifying) economies.
James Kaplan, senior vice president of development, Minor Hotel Group, Bangkok: Keeping in mind it’s coming off a low base, Sri Lanka is heating up, as is the Indian Ocean region as a whole.
Achin Khanna, managing director, HVS, New Delhi: Medium- to long-term in India, I would keep an eye out for Bhopal, Bhubaneswar,Vishakapatnam, Vijayawada, Patna and Bodh Gaya.
HIO: How can developers work around the high costs and limited product in gateways, especially in Europe?
Ramsey Mankarious, founder and CEO, Cedar Capital Partners, London: Think outside the city center box. You won’t find much in Mayfair (London), but in up-and-coming neighborhoods like Shoreditch, it is more doable, even though Europe is still a tough market for developers.
HIO: What’s the biggest shift in developers’ thinking for 2015?
Leslie Ng, CIO, Interstate Hotels & Resorts, Arlington, Virginia: We are beginning to see developers taking a more aggressive posture with newer brands from the majors, such as AC by Marriott, Starwood’s Aloft and Home2 by Hilton.
Dominic Murray, director, head of EMEA Brokerage, CBRE Hotels, London: Economy brands will be hotter than ever. Motivating factors include excellent cost to value; brands in this space typically yield space more efficiently than their more traditional counterparts, which gives a competitive advantage. They tend to be private vehicles, which can use their balance sheets and can utilize the full spectrum from acquisition of land, conversion of buildings, leasing, etc., to secure the best sites. Examples include CitizenM, Inter Ikea Group’s deal with Moxy, Tune and Motel One.
HIO: What’s the hottest product for 2015?
Robert Hecker, managing director, Pacific Asia, Horwath HTL, Singapore: Nothing radically different. Prime, quality assets remain the most desired for their capital appreciation/sustainability. Failing that, as product positioning reduces, portfolios typically have to be involved to garner adequate interest.
Willis: Where they are feasible, premium branded select-service and upscale extended-stay will continue to generate development interest because they are the fastest to ramp up toward stabilized cash flow, and more and more travelers are choosing them over higher-priced alternatives.