Deals will flow even more freely during 2014 than they did a year ago, panelists said Friday during the closing general session of the 26th annual Hunter Hotel Investment Conference, according to a report from HNN’s Shawn A. Turner.
Mark Elliott, senior managing director and partner at Hodges Ward Elliott, said he expects deal volume to increase by between 30% and 35% during 2014 when compared to 2013. Year to date, the hotel brokerage has seen a total of $2 billion in hotel transactions and financings. The firm did $3 billion in sales, financings and recapitalizations in 2013.
Elliott’s fellow panelists affirmed the increasing deal activity and indicated they were gearing up to go after hotel transactions during 2014.
Canadian real estate investment trust American Hotel Income Properties went through an initial public offering a year ago, and the REIT intends to raise an additional $100 million to $150 million in capital this year, CEO Rob O’Neill said.
Speaking of transactions, hotel deal volume in Canada during 2013 increased 72% over the previous year, with 115 transactions topping $2 billion in sales, according to Colliers International Hotels. The company forecasts 2014 deal volume between $1.25 billion and $1.75 billion.
“2013 proved to be one of the strongest years for Canadian hotel investment in a decade,” said Alam Pirani, executive managing director with Colliers International Hotels, in a news release. “In fact, in terms of absolute deal volume, 2013 ranks in the top three as the highest year on record following only the pre-recession 2006 and 2007 era. Positive domestic economic conditions, coupled with attractive yields for hotels versus other real estate classes as well as the availability of high-quality product are some of the elements that draw local and foreign investors to Canada’s hotel market.”
Foreign investment in Canadian hotels grew last year to the highest levels since 2007, accounting for approximately $857 million in sales of nine transactions.
Euro area annual inflation is expected to be 0.5% in March 2014, down from 0.7% in February, according to a flash estimate from Eurostat, the statistical office of the European Union.
The Eurostat estimate puts the inflation rate well below the European Central Bank target of just below 2% and lower than the 0.6% rate expected by analysts, according to a BBC report. The lower-than-expected rate might reinforce concerns that the 18-nation eurozone risks a damaging period of deflation.
The economic clout of the Chinese outbound tourist has been well-documented. That spells good news for the United States, which is expected to host nearly 2.5 million of them during 2014, according to Attract China, an organization dedicated to help clients target the market.
Among other highlights from the company’s proprietary research:
- During 2018, the Chinese traveler will be the No. 1 overseas visitor to the U.S., overtaking Brazil, Germany, Japan and the United Kingdom.
- The average Chinese traveler will spend nearly $6,000 per trip to the U.S.
- The increasing number of direct flights from China to the U.S. correlates to the growth in Chinese visitors.
The quality of customer experience at U.S. hotels fell in the past year, with the industry ranking 15th of 19 industries studied in the “2014 Temkin experience ratings,” conducted by the Temkin Group.
According to the study of 10,000 U.S. consumers, the hotel industry averaged a 60% rating, down from 65.4% in the previous year. It was one of four industries that declined in the ratings from 2013 to 2014.
Among hotel companies included in the survey, Best Western International led with a 69% rating, placing 102nd overall of 268 companies included. La Quinta Inns & Suites was second among hotel companies with a 67% ranking. Motel 6 and Super 8 tied as the lowest-rated hotel chains, each with a rating of 47%.
Compiled by Ed Watkins, Patrick Mayock and Terence Baker.