CHICAGO—Sales of hospitality properties across the United States are expected to increase in the foreseeable future, thanks to continued strength in property fundamentals, according to new research released by Marcus & Millichap Real Estate Investment Services.
“Our Q1 2013 Hospitality Research Quarterly Update indicates that investors remain encouraged by the industry’s heightened prospects for an extended run of strong performance and the establishment of new highs in room occupancy, average daily rates and revenue per available room,” says Gregory LaBerge, national director of Marcus & Millichap’s National Hospitality Group.
Financing is expected to remain plentiful, helping to drive increased transaction volume. “Access to acquisition financing is modestly expanding and conduits are expected to take a greater role during 2013, though their focus will remain limited to top flags and sponsorships,” says William E. Hughes, senior vice president and managing director of Marcus & Millichap Capital Corporation (MMCC).
As an example of recent transaction trends, Marcus & Millichap’s National Hospitality Group closed 19 hotel property sales in the first quarter of 2013, a 19 percent increase over Q1 2012.
Here are a few highlights from the Q1 Hospitality Research Quarterly Update:
· Record Room Nights to Raise Occupancy, Revenue. Behind a 1.8 percent jump in room demand, national occupancy will rise 60 basis points to 62.0 percent in 2013. The effects of federal spending cuts slightly temper the prospect of fulfilling the forecast. ADR and RevPAR will rise 4.8 percent and 5.8 percent, respectively.
· Nominal Construction Persists. Limited development and stock removals in a record 15 states held growth in available rooms to a scant 0.5 percent last year. Supply will increase 0.9 percent in 2013, which is less than half of the long-term average. However, the pipeline is starting to fill. The number of rooms under construction rose nearly 40 percent over a recent 12-month stretch, indicating supply growth of more than one percent in 2014 and an even higher rate of growth in 2015.
· Foreign Visitors Coming Ashore. Florida and Hawaii posted increases in visitor volume last year on the strength of significant growth in international travel. Growing wealth in South America, China and India will continue to drive up room demand from international visitors.