Hotel Investments: Where do we go from here?
By Lori Raleigh Executive Director, International Society of Hospitality Consultants | July 23, 2006
At the recent Americas Lodging Investment Summit conference there was quite a bit of good news---|the industry has just finished up the year with record profits for 2006! Transition dollar volume is also at all time high and 2007 is expected to be another record year for RevPAR growth, industry profits and transactions.
There was also some not so good news---|supply growth is escalating; the rate of RevPAR growth is decelerating and there has been a significant decline in international business (as a percentage of total demand). Additionally, many hotels are facing increased expenses and human resource challenges.
And there are also many areas of uncertainty---|investment return/risk premiums have been collapsing; corporate profit growth rates are declining and the impact of the negative personal savings in 2006 on long term consumer spending is unclear. There is also the issue of the inverted yield curve -and what impact the potential "retrenchment" of foreign investment in US debt might have on long term yield rates.
What does this all mean in terms of where we at in the investment cycle? And where do we go from here?
Following are some thoughts and observations to share.
The Good News!!...