2020 Hotel Transactions and RevPAR
— 10 experts shared their view
view details of this viewpoint
Based on survey results, the panel is bullish (median 67.5%) on the prospect of the 2020 transaction market beating 2019's tally of $62 billion. Interestingly, nearly 1/3 of the panel is 100% confident of this! On the other hand, the panel's outlook on U.S. RevPar for 2020 (median at 50%) is gloomier with nearly 2/3 of the panel believing it less than 50% likely to exceed STR's forecast of 0.5% growth.
Questions to panel experts: Why are you so bullish on hotel transactions but more conservative on RevPAR? If hotel operating performance stagnates, why will there be such continued interest in acquiring hotel properties? Should growth in hotel performance (i.e., RevPAR) not be a significant force driving hotel transactions and values? For the naysayers on transaction growth, why is this the case?
Senior Associate at HVS Hodges Ward Elliott
In terms of European hotel transaction levels, I am not as bullish as the majority of the panel on the volume of deals exceeding that of 2019. Although investor interest remains high (in spite of mixed RevPAR growth across the continent), there is a strengthening mismatch between the amount of capital looking for investment opportunities and the number of suitable investments. Largely driven by the shift in European hotel ownership towards longer term, institutional investors in recent years, this lack of available stock in my mind may hold back transaction levels in 2020. This same mismatch combined with continued cheap debt will likely result in further yield compression in the near future.
Considering the panel's gloomier outlook on US RevPAR performance combined with an election year, which region do panellists see global transaction growth being fuelled from?