The global hotel transaction landscape
Global markets may still be in a state of flux, but there is little doubt that a strong 2013 hotel investment landscape is likely to carry into this year. Data from 2013 prove so. According to Jones Lang LaSalle research, transaction volumes last year increased 40 percent year-on-year to total $46.7 billion?marking a five-year high. This number was driven by steady hotel operating performance, increased debt market activity and investors? quest for yield.
Breaking it down regionally, we see that the bulk of transactions were based in the Americas, which accounted for $24.0 billion in sales volume. It was followed by EMEA with $13.2 billion and Asia Pacific accounting for $9.5 billion.
Private equity dominated hotel acquisitions, particularly in the U.S. and Europe, in 2013, accounting for one-third of all investment, according to JLL. Blackstone Group, in the news recently for taking both Hilton Worldwide and La Quinta public, was also a big buyer in 2013, acquiring, for instance, the Hyatt Regency Waikiki Beach Resort for a hefty sum of $450 million last April.
REITs and Middle Eastern sovereign wealth funds were also active. One doesn?t have to look further than Qatar?s Constellation Hotel Holdings, which made two very large buys in 2013, both from InterContinental Hotels Group. In March, it acquired the London Park Lane for $457 million, and followed that up in December by acquiring an 80-percent stake in the New York Barclay for $240 million.
Hotel operators continued to be sellers in 2013, as evidenced by IHG?s disposals. They weren?t alone. Starwood Hotel & Resorts Worldwide, which sold Warsaw?s Hotel Bristol in December 2013, pledged to unload as much as $3 billion in assets, following along their asset-light path.
As good as 2013 was, 2014 is poised to be better. JLL forecasts that global deal volumes will hit the $50-billion mark, an 8 to 10 percent increase over 2013. Forecasting it out regionally, JLL says the bulk of sales volume will still be in the Americas?predicted to account for $28.0 billion in sales?followed by EMEA with $16.0 billion and Asia Pacific with $6.0 billion.
We are already seeing support of this lofty number. As the year turned, Marriott International sold three Edition hotels it owned for around $815 million, and in the Miami area, the Shore Club was unloaded for $175 million, while Starwood continued its sell surge, disposing of the St. Regis Bal Harbour for $213 million. Then, in February, news broke that New York?s Standard Hotel sold for $400 million, or more than $1 million per key, to Standard International. The price paid was the highest for a U.S. hotel since the financial crisis.
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