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| Mark Woodworth |
ATLANTA, GA (April 8, 2013) – After tanking in the Great
Recession, the hotel industry has almost fully recovered and now boasts
rock-solid operating fundamentals.
That was the
consensus of a panel of experts on the most recent episode of the “Commercial Real
Estate Show” radio program, hosted by Michael Bull of Bull Realty. The
episode provided an enlightening look at the hospitality and lodging industry.
Topics included occupancy rates, investment sales, the availability of capital
and typical loan terms.
“I would say it’s a
fact that, by just about any measure, hotels have led all other property types
in terms of the overall recovery,” said Mark Woodworth, president of PKF
Hospitality Research. “We’ve seen some very, very attractive increases in demand.”
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| Michael Bull |
The national hotel
occupancy rate is now just shy of its long-term average of 62 percent,
according to Woodworth.
With decreased
vacancies comes increased pricing power. Citing data from Smith Travel
Research, Woodworth said the average U.S. hotel increased its rates by 4.2
percent on a year-over-year basis in 2012. Rates should increase by an average
of 5 percent this year and an average of 6.2 percent in 2014, he predicted.
While the sector as
a whole is prospering, certain types of assets naturally are performing better
than others, and, perhaps surprisingly, luxury hotels have shown the strongest
recovery, guests noted.
 |
| Judy Hendrick |
“The way I think of
it is, the higher your room rate, the better you’re probably doing,” Woodworth
said.
Despite the strong
uptick in property performance, investment sales of hotels have yet to attain a
brisk pace, guests observed. Uncertainty about the economic recovery has
suppressed hotel sales and property values, but “the great news is that’s going
to be dissipating as we move through 2013, and we expect some very attractive
pops in hotel property values in 2014 and beyond,” Woodworth said.
Debt and equity
capital have returned to the hotel market, although the availability of funds
does not match the 2006-2007 era, said Judy Hendrick, CFO of Aimbridge
Hospitality, a firm that owns and operates hotels in 29 states.
 |
| Nelson Migdal |
“Even a year ago, if I wanted to go look for debt to
refinance or acquire a property, I would have had to search and search to get
one quote from a lender,” she said. “Now there are numerous lenders that have
come back into the market, so that has changed a lot of the dynamic.”
Active lenders
include Fifth Third Bank, Wells Fargo and JP Morgan, guests said.
Despite increased
lender appetite for hotels, the amount of equity needed to obtain an
acquisition loan is considerable, said attorney Nelson Migdal, co-chair
of the Hospitality Group in the Greenberg Traurig law firm. “You are going to
have to have a capital stack where your equity is between 60 and 70 percent [of
the purchase price],” he said. “You’re not going to walk in there with 20
percent equity any more.”
The entire episode
on the U.S. hotel and lodging market is available for download at
www.CREshow.com. The next “Commercial Real Estate Show” will be available April
11 and will examine legal issues prevalent in the commercial real estate
industry.
For a complete copy of the company’s news release, please
contact:
Stephen Ursery
The Wilbert Group
E-mail: sursery@thewilbertgroup.com
Office: (404) 965-5026
Cell: (404) 405-2354
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