HOTEL
EDITORIAL ADVISORY BOARD
PERSPECTIVES
lobal digest
Arthur Adler
Managing Director & CEO, Americas
Jones Lang LaSalle Hotels
A Quarterly Supplement
JANUARY 2009
James Anhut
SVP, Franchise Development
InterContinental Hotels Group
News watch
Sumner A. Baye
President/Partner
International Hotel Network LLC
Hotel Development Dives Across Globe…
As the financing freeze spreads across the globe, hotel development has come to a
virtual halt. Even areas that were once considered immune from the global credit
crisis, such as the Middle East, are beginning to witness a diminished pipeline.
In its Q3 ’08 report on Europe, the Middle East and Africa, Portsmouth,
NH-based Lodging Econometrics counted a total construction pipeline of 1,656
projects with 358,067 rooms, a drop of 6% and 4%, respectively, from what it
terms a cyclical peak in Q2 ’08. Of those three separate regions, the Middle East
registered the smallest drop-off, a 3% decline in both projects (556 down to 541)
and rooms (164,259 down to 159,690) between the second and third quarters.
Similarly, the total pipeline for Latin America, which includes Central and
South America, the Caribbean and Mexico, had decreased between Q2 and Q3
of 2008, going from 670 projects and 121,431 rooms to 640 projects and 113,505
keys. Likewise, the Asia Pacific region witnessed a decline in the total number of
projects of 8% to 1,990 in Q3 ’08. The room count dropped 11% to 466,456.
The total construction pipeline in the US also saw its first quarterly decline in
five years, according to LE. The number of projects shrank by 4% to 5,652, while
the unit tally dropped 6% to 740,272. In Canada, the Q3 ’08 total pipeline stood
at 231 hotels with an aggregate 29,517 rooms, the lowest level in seven quarters
and a decline of 9% from the previous quarter.
Monty J. Bennett
President & CEO
Ashford Hospitality Trust
James E. Fitzgerald
Managing Director, Hotel Investments
Principal Real Estate Investors
John Hamilton
SVP, Acquisitions & Business Development
Pyramid Advisors LLC
Joel W. Hiser
CEO
Horwath Hospitality Investment Advisors
Robert Koger
President
Molinaro Koger
Mark Lanspa
Vice President
Goldman, Sachs & Co.
…As Does Transaction Activity in the US
Between quarters one and three of 2008, hotel transaction volume fell by
more than 67% nationwide, according to Hotel Brokers International, a
network with more than 30 offices in the US. Deals done specifically by its
member brokers also declined, but at a lesser rate than
the industry as whole.
Between January and September of ’08, Kansas City,
MO-based HBI tracked 216 public transactions versus
582 in the same period a year earlier. At the same time,
its members recorded 57 deals compared to 118 for the
first three quarters of 2007.
H. Brandt Niehaus, president of HBI and Huff,
NIEHAUS: Niehaus & Associates Inc. in Louisville, KY, says transac-
“By the end of
tion volume is down because buyers and sellers remain
the first quarter,
far apart on price. “The buyer is worried about how
you'll see
much worse it will get, so therefore he wants a discount,”
evidence that
Niehaus explains. “But the seller says, ‘Why should I discount it? It hasn’t changed that much for me yet.’ The
lenders are
biggest reason we’ve had a lack of transactions is that the
back into the
buyer and seller can’t come together.”
game.”
Niehaus expects Q1 to witness a depressed transaction
marketplace, but the pace should pick up as the year
progresses. “By the end of the first quarter, you will see evidence that the
lenders are back into the game—they have to lend,” he says—Maria Wood ◆
Gary Mendell
Managing Member
HEI Hospitality
Nelson F. Migdal
Shareholder
Greenberg Traurig LLP
Lori Raleigh
Executive Director
ISHC
Rick Swig
President
RSBA & Associates
Robert Winchester
Co-President,
Finance & Business Development
Waterford Hotel Group Inc.
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Donald W. Wise
Global Hospitality Industry
Managing Partner
Johnson Capital
HOTEL PERSPECTIVES IS PUBLISHED IN THE JANUARY, MAY,
JULY/AUGUST AND NOVEMBER ISSUES OF REAL ESTATE FORUM.
EDITORIAL INQUIRIES: Maria Wood, maria.wood@incisivemedia.com
