As the economy moves farther from recession, 2015 won’t be the year of the easy bargain. Instead, savvy investors need to find the niches and micro-markets that offer the most bang for the buck.
Here are some expert’s views on where to find the best hotel real estate acquisition opportunities.
HOTELS’ Investment Outlook: Will U.S. hotel values still upward mobility in 2015?
Peter Willis, CIO, Chatham Lodging Trust, Palm Beach, Florida: Yes. There should be room to run in U.S. markets, which rely heavily on the group segment as well as government-related demand since they are still down from their previous RevPAR peak.
HIO: Are there any bargains left in the market?
Dominic Murray, director, head of EMEA Brokerage, CBRE Hotels, London: Pricing is already aggressive in major markets. Regional markets are where the upside is, especially on the European continent.
Ramsey Mankarious, founder and CEO, Cedar Capital Partners, London: Nobody can expect to get a steal, at least here—even in the recession that was true. Now, you really get what you pay for.
Trevor Ward, managing director, W Hospitality Group, Lagos: Virtually every asset put on the market in sub-Saharan Africa is over-priced – either due to a lack of understanding, or an expectation that the purchaser will pay top dollar for the future upside.
HIO: Are trophy assets trending?
Sarmad Zok, chairman and CEO, Kingdom Hotels Investments, Riyadh: Yes. Investors also want to see a growth trend and ability to add value to a property. An example would be the sale of the Waldorf Astoria in New York, one of the world’s most iconic hotels, where the buyer plans to undertake an extensive renovation program.
HIO: Where are the hot and cold spots for performance?
Zok: The U.S. has rebounded over the past six months on the strength of economic data, while London and Paris will continue to lead Europe. Africa should see a resurgence once Ebola fears are contained.
James Kaplan, senior vice president of development, Minor Hotel Group, Bangkok: Performance will continue to be strong in the Middle East and flat to weak in China.
Guy Wilkinson, managing director, Viability, Dubai: Hot markets in terms of ROI include Dubai, of course, and also Jeddah and Riyadh. There is even significant investment going into Egypt’s Red Sea and Gulf of Aqaba coasts, despite the insecurity in northern Egypt and Palestine.