Global hotel volumes to jump 40% in 2011: JLL Hotels

Following a strong recovery in 2010, global hotel transaction volume is set to increase by another 30-40% in 2011, according to initial results from Jones Lang LaSalle's Hotel Investment Outlook 2011. This would mean a total volume of around $28-$30 bn (EUR 21.5-23 bn).

After 'a very challenging year' in 2009, which was characterised by frozen liquidity, stalled transactions and drastic drops in hotel performance and values in many hotel markets globally, 2010 signalled dramatic improvement and a fresh pace for opportunistic, cashed-up buyers, the adviser said.

JLL Hotels expects to see REITs, institutional investors and private and high net worth investors with opportunistic capital investing next year.

'With more stock hitting the market in 2011, there will again be an increased depth and breadth of opportunities for investors,' said Arthur de Haast, global CEO of Jones Lang LaSalle Hotels. 'Until liquidity improves in the debt markets, however, the most acquisitive hotel investors will likely be those that make all-equity purchases or structure acquisitions with low leverage levels.'

Debt remains selectively constrained in the markets which relied heavily on leverage in the lead-up to the global recession, such as the US, UK, Ireland, Japan and Spain, but it is easing. Nevertheless, new lending will remain fairly limited until lenders fully rebuild their balance sheets and write down asset values, a delicate process which needs to be carefully balanced and is taking longer than expected, the report concluded