Reports

Market Pulse: Tucson, AZ

Tucson, like much of the Southwest, has undergone a prolonged recovery since the 2008/09 recession. Tucson's hotel market realized unprecedented growth in the years leading up to 2008. But the hotel supply pipeline has been muted in recent years, and hotel performance still falls short of the prior peak. There are several factors that have affected historical hotel performance trends in Tucson, including a large amount of lower-rated government demand, which draws down the overall average rate in the market, and the relatively limited number of direct flights from Tucson International Airport. However, the extenuating circumstances behind the long-drawn recovery of Tucson's lodging market, in many ways, trace back to the performance of its resort segment.

By Ryan Wall and Michael Smithson

Tucson, Arizona, United States

Key Takeaways: The CREF/MBA Conference 2017

HVS again hosted a booth at this year's Commercial Real Estate Finance (CREF)/Multifamily Housing conference, run by the Mortgage Bankers Association (MBA). More than 3,000 mortgage and lending professionals attended the CREF conference, one of the biggest annual gatherings focused on commercial real estate assets. While hotel-specific data and discussions are only part of the overall scope at the conference, many of the insights, observations, and predictions for commercial properties also apply to hotels.

By Brett Russell, Senior Vice President and Director of Business Development with HVS, HVS

United States

HVS Key Takeaways: Tourism, Hotel Investment & Networking Conference (THINC) Sri Lanka 2017

The 2nd edition of the Tourism, Hotel Investment & Networking Conference (THINC) Sri Lanka, hosted by HVS, concluded on 8 February 2017. 170 delegates, representing hotel companies and operations, banks and financial institutions, consulting firms, ownership and development, as well as architecture and design, gathered in Colombo to provide insights into the dynamic Sri Lankan hospitality and tourism industry. In addition to deliberating the prevalent trends and current performance of the hotel sector, stakeholders emphasised the vast potential of the island as well as the key challenges that lay ahead.

By Hemangi Bhandari, Senior Associate - Consulting & Valuation at HVS New Delhi, HVS

Sri Lanka

Market Pulse: St. Louis, MO

St. Louis is poised to enter a post-recovery phase of economic development and expansion that should continue to support the recent growth of the region's hotel market. Numerous proposed developments and business expansions are anticipated to pave the way for continued transient and extended-stay lodging demand growth. Meanwhile, the convention center is operating at new peak capacity. While the growth of hotel supply has begun to accelerate, it remains modest in comparison to most major markets across the country, and is expected to stay in check through the near term. As such, St. Louis is ripe with hotel investment opportunities, provided that buyers and developers exercise appropriate due diligence and market research to identify assets and locations that will provide fruitful returns.

By Tim Sauer, Senior Project Manager at HVS St. Louis, HVS

St. Louis, Missouri, United States

Snapshot of the Washington DC Metropolitan Region’s Lodging Market

2016 was a solid year for the Washington DC Metropolitan region's lodging market. According to Smith Travel Research (STR), the year-end 2016 RevPAR growth for the Washington DC MD VA region was up 4.9% over 2015, ranking it 9th of the 25 top markets it tracks. The region was 4th of 25 in terms of occupancy growth at 2.2%, but 18th of 25 in ADR growth at 2.7%. The predominance of demand tied to the Federal Government and the government lodging per diem continues to limit some of the region's pricing power. While more press is given to business and tourism demand in downtown Washington, DC, neighboring suburbs, particularly Arlington County in Virginia, and Montgomery County in Maryland, are also contributing to the region's solid growth statistics despite challenges in these suburban office markets.

By Anne Purcell, Vice President with Pinnacle Advisory Group, Pinnacle Advisory Group

Washington, District of Columbia, United States

HVS Market Pulse: Antigua

Antigua, the largest island of the nation of Antigua and Barbuda, is gaining increased presence as an icon of Caribbean tourism and recreation. The island's coastal geography makes it ideal for yachting and sailing, and its deep harbor accommodates massive cruise ships, as well. The opening of the state-of-the-art VC Bird International Airport in 2015 has allowed for even more passenger traffic to Antigua, helping to raise the island's profile among destination markets in the Caribbean.

By Kristina M. D'Amico, Senior Vice President - Director, Caribbean Region, Miami, HVS

Antigua, Antigua and Barbuda

HVS Market Pulse: Houston, TX

Houston is a city of DOERS, per the latest ad campaign presented by Chevron and released in advance of Super Bowl LI, held in Houston on February 5, 2017. The ad incites the can-do spirit of a city without limits. A city that is a global leader in energy and healthcare, that consistently ranks near the top for fastest growing major metro areas, and that once put a man on the moon. While the "We choose to go to the Moon" days are gone (but not forgotten), Houston's reputation as a tough, resilient, city of DOERS remains.

By J. Carter Allen, Managing Director, HVS

Houston, Texas, United States

HVS Market Pulse: Irvine, CA

In square miles, Irvine is the largest city in Orange County, California. Irvine is also one of the most expansive master-planned communities in the nation, developed in the 1960s by the Irvine Company and incorporated in 1971. For consecutive years, MONEY magazine has named Irvine one of the best places in the U.S. (the city ranked 20th in 2016). Irvine also ranks as the third-best city in America for working parents. Over the past 45 years, Irvine's population has grown from 10,000 to nearly 260,000 residents.

By Li Chen, Vice President, HVS

Irvine, California, United States

Austria’s Tourism Reaches 140 Million Mark For The First Time | tourism-review.com

The year 2016 brought many visitors to the Alps and to the Danube. However, for the hoteliers not everything is rosy. The start of the winter season was somewhat weak for Austria’s tourism.

The hotel industry in the Alpine republic is flourishing. Austrian hotels managed to generate 140.85 million overnight stays in 2016. This is a 4.2% increase compared to 2015. This figure is a new record for Austria’s tourism and is above the 140 million mark for the first time ever.

tourism-review.com

Austria

German Tourism Reaching New Record | tourism-review.com

The Baltic Sea, Allgäu, Lake Constance – German destinations are more popular than ever. Last year a new peak of 447.3 million overnight stays in terms of domestic and foreign guests was reported. The growth of German tourism is expected to continue in 2017. Germany’s travel industry boom has no end. The number of overnight stays rose to a record value of 44.3 million. This is the sixth year in a row in which a new record had been reached.

tourism-review.com

Germany

French Tourism Industry Is Finally Growing | tourism-review.com

French tourism industry is finally celebrating. After two years, tourists are back in force in France. The strong rebound, that reaches the figures from before the attacks in 2015 and 2016, benefits mainly to the urban areas and in Ile-de-France, according to INSEE (French National Institute of Statistics and Economic Studies). During the last three months of 2016, the amount of overnight stays showed an increase of 3.9% compared to the last quarter of 2015, after two consecutive quarters of decline, according to the Institute of Statistics. This strong rebound is more than offsetting the net decline recorded a year earlier (-1.8%) related to the impact of the attacks from January 2015.

tourism-review.com

France

#11 Hotels performances in Europe in 2016 #LTDC | hospitality-on.com

MKG Consulting presents "Let's take a coffee brake together", several short analysis covering trends and performances regarding the hospitality sector. Today, Vanguélis Panayotis presents you hotels performances in Europe in 2016.

Hospitality ON

Global Lodging Forum – Round Table on the Franchise model | hospitality-on.com

On Monday, April 10, the 21st edition of the Global Lodging Forum will begin. this year it will adopt a more participatory format through presentations, round tables and workshops. The global theme will be: "Where will you be the day after? Actor or victim of the restructuring of the Hospitality Industry?", a specific round table will cover the economic model of the franchise, early afternoon in the rooms of the Pullman Paris Montparnasse.

Hospitality ON

Paris, France

In Focus: Nashville, TN

Nashville, capital of Tennessee, has experienced a renaissance in the last several years. Booming health care, manufacturing, and technology industries coupled with a low cost of living has led to strong population and employment growth. The ramping up of the Music City Center has bolstered room-night demand and helped push hotel occupancy to a new peak. Furthermore, the city's growing national and global profile has led to significant increases in travel and tourism; Nashville was the only U.S. city listed on Lonely Planet's Top Ten City Destinations of 2016. The following HVS In Focus report details recent performance and market trends relevant to the Nashville hotel industry, as well as data and forecasts that can assist hotel stakeholders with buying, selling, and holding opportunities.

By J. Carter Allen, Managing Director, HVS

Nashville, Tennessee, United States

International Sporting Events – Takeaways for Hotel Investors

IntroductionThere is no doubt hosting a major sporting event boosts the profile of the country and city. Who does not want to visit Rio after the recent FIFA World Cup and Olympics? However, these events are only for a few weeks and even allowing for a year of visits from sponsors and managers in the lead up to the event and the boost to demand once the curtain comes down and the television cameras depart, does hosting an international sporting event justify building new hotels?

By Tshepo Makhudu, Senior Consultant at HVS Cape Town, HVS

HVS Market Pulse: Why Aren’t Hotels Being Built in Ski Towns?

In ski resort towns across the U.S. and Canada, a large and growing number of people are hitting the slopes. In the 2015/16 ski season alone, total skier visits approached 64 million, an increase of about 1.9 million skiers from the previous season. The most recent performance is still about 3.6 million skier visits lower than the peak season of 2010/11, showing that the industry has room for even more growth. Yet despite the climbing numbers and the continued potential for growth, few ski resorts have realized an increase in their bed base. The limited supply increases have come in the form of fractions or timeshares, not traditional hotels.

By Brett Russell, Senior Vice President and Director of Business Development with HVS, HVS

United States

US Hotel Value Gains Moderate as RevPAR Growth Slows and Cap Rates Rise

Hotel investment activity experienced a bumpy ride in 2016. With a slowdown in RevPAR growth, a stalled CMBS market, and concerns about increased supply, cap rates rose and deal activity slowed. The year ended on a positive note as lodging REIT stocks rallied and economic growth is projected to strengthen. This article, which is published biennially, discusses trends in hotel capitalization rates and provides an outlook for 2017.Following exceptionally strong hotel transaction activity in 2015, the market stalled in the first quarter of 2016 and then rebounded, ending the year with a healthy level of transactions, comparable to the level reached in 2014. Total volume in 2016, based on preliminary data reported by Real Capital Analytics (illustrated in the chart below), reached $35 billion, a decline of 30% from the $50 billion of hotel transactions in 2015, which represented a peak for the current cycle. Deal activity was put off during the first quarter of 2016, as investors and lenders reacted to the stock market correction. The Dow declined by over 8% in early January 2016 and did not fully recover until April. Transaction activity was down 60% and 43% year-over-year for the first two quarters, respectively, and then rebounded strongly in the third quarter of the year. Despite slowing RevPAR and net income growth, capital in search of yield and a safe haven continues to be attracted to the lodging industry. Hotel values continued to rise modestly in most markets over the course of the year, despite the rise in capitalization rates, due to continued RevPAR and NOI gains.The average price per key derived from total sales volume declined by 8% from $156,000 to $144,000, due primarily to the profile and locational mix of assets that transacted. A smaller number of large, full- service hotels were sold during the year, affecting overall volume and average price per key. In addition, fewer hotels were sold in the major metro markets, while investors turned to secondary and tertiary markets such as Atlanta, Dallas/Ft. Worth, Phoenix/Scottsdale, Austin, San Antonio, Birmingham, Chattanooga, among others, in search of more affordable, value-add opportunities.Major hotel sales, defined as those that sold for a price of $10 million and over, declined by 28%, and the average PPK declined by 9%, from $244,000 to $222,000 per room. The price-per-key trends should not be viewed as the value declines, as average sales price per key are greatly affected by the composition of assets sold.

By Suzanne Mellen, Senior Managing Director - Practice Leader, San Francisco, HVS

United States

In Focus: African Hotel Market Update

And breathe……… Wow, 2016 was quite a year and turned the world on its head; the UK voters opted for Brexit and the US electors chose Donald Trump as their next president. These monumental decisions will have far-reaching ramifications that will impact on us all, including Africa.

By Tim Smith, Managing Partner, HVS Cape Town, HVS

South Africa

Tyrolean Tourism Generates 6.4 Billion Euros | tourism-review.com

Tyrolean tourism provides about 80,000 jobs and accounts for almost a quarter of GDP reaching 6.4 billion euros. With around 340,000 beds, about 46 million overnight stays a year, and more than 53,000 directly employed persons, tourism is an exceptionally important economic activity for Tyrol, according to a study commissioned by the Province of Tyrol in cooperation with the German Association for Applied Economic Research.

tourism-review.com

Tyrol, Austria

Russian Tourists Boost Spanish Tourism Again | tourism-review.com

Nearly a million Russian tourists visited Spain between January and November 2016, 1.8% more than in the previous year, a figure that is rebounding from the lows, although it is still far from the 1.5 million arrivals in 2013.

According to Alla Manilova, from Russia’s Deputy Minister of Culture, in the first eleven months of the year 953,000 Russian tourists visited Spain. This figure is in contrast to the 40% decline since 2014 and coincides with the instability of the Russian rouble at the time and "the worsening of political relations between Russia and Europe," he explained.

tourism-review.com

Spain