Hotel investors keep hold of assets as financial crisis bites, says JLL

Hotel investor sentiment in Europe, Middle East and Africa (EMEA) has moved further in favour of 'hold' as the impact on the industry is felt through falling income, according to the latest Hotel Investor Sentiment Survey (HISS) research report by Jones Lang LaSalle Hotels.

The survey findings report that the increasing effects of the financial turmoil, together with worsening global economic conditions, have begun to exert substantial pressure on trading performance expectations. Mark Wynne-Smith, CEO of Jones Lang LaSalle Hotels in EMEA said: 'Both short term and medium term expectations turned negative across the region and investors are adopting a very bearish outlook for the coming six months. Expectations in the medium term were only marginally negative, but the fall was the largest that we have experienced over the life of the survey.'

The most negative outlook was recorded for the UK, particularly for cities such as Manchester and Birmingham. These cities are highly dependent on domestic demand which is forecast to drop rapidly in the coming year.

Overall, trading performance expectations in the medium term prove more optimistic. Strongest medium-term expectations were reported for Moscow, Paris, Rome and London. Moscow is expected to have strong income growth potential in the longer term. Germany, too, was expected to weather the storm relatively well.

'Yield requirements have softened across all cities. The greatest increase in yield requirements has occurred in central and eastern Europe. The gap was narrowing until the end of 2007, but recent events have rapidly reversed this trend. We expect the gap to widen further with investors expecting more severe softening in eastern European yield requirements in the coming months compared to those in the west,' Wynne-Smith said.