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Hotel operating fundamentals remain robust

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Hotel Investor Sentiment Survey​ | December 2015

​​What are the hot markets? ​Where are investors planning to develop or acquire? Find the answers in our latest Hotel Investor Sentiment Survey​.​ ​

Global Highlights​

Global transaction volume is up 28% through YTD November 2015 and on track to exceed our forecast of USD68 billion in 2015. However, deal volumes and asset valuations appear to be plateauing.

Investors’ near-term sentiment for hotel performance globally has softened since last year’s survey with recent market volatility weighing on some investors. That said, underlying hotel operating fundamentals remain robust across most markets. 

Hotel investors’ outlook for the next two years has shifted from 61% positive one year ago to 39% positive. 

Those surveyed have the most optimistic outlook for Asia Pacific during the next two years, followed by EMEA and North America.

Surveyed initial yields (cap rates) have generally stopped the trend of narrowing seen in recent surveys, with the current level within 20 basis points of the level from one year prior.

During the next six months, yields are expected to mark an uptick across many gateway markets while investors see cap rates continuing to trend downward in secondary cities.

The availability of debt and equity remains at a multiyear high and the proportion of cross-border activity is at a record high.

Investors say that Barcelona and Milan have the most runway to grow ahead while Hong Kong, New York and Paris are at a peak.