Worldwide hotel transaction activity is showing green shoots of recovery, according to new figures released by of Jones Lang LaSalle Hotels. Following five consecutive quarters of sharp contraction, the second quarter of 2009 registered a 3 percent increase in activity.
Global hotel transactions during the first half of 2009 totalled $3.7 billion, representing a 78 percent downturn compared with the first half of 2008, according to the new report.
However it says promising signs have surfaced, with the first quarter of 2009 marking the low point in hotel transactions - the weakest activity level tracked since the third quarter in 2001, when the market was badly impacted by the 9/11 attack in New York.
“Global hotel transaction volumes during the second quarter of 2009 showed a three percent increase on the previous quarter, the first quarterly increase following five consecutive quarters of declines,” said Arthur de Haast, global CEO of Jones Lang LaSalle Hotels.
During the first half of 2009, Europe, Middle East and Africa (EMEA) was the most liquid region, with hotel transaction volumes of $1.9 billion, down 76 percent from the first half of 2008.
The Americas was the second most liquid region globally, but also saw the most pronounced decline in transaction volume, down 86 percent to $1.0 billion. Asia Pacific hotel transaction activity showed a more moderate decline, comparatively, of 55 percent, to $0.9 billion.
Sustained revenue per available room (RevPAR) declines globally - mostly in the double digits - and ongoing debt market illiquidity continued to be significant challenges for hotel investors.
“Just 13 of the hotel transactions globally were in excess of $100 million, compared with 34 transactions during the first half of 2008. This shows that credit for larger transactions has dried up further this year, from an already constricted financing environment in 2008,” said de Haast.
The outlook for hotel transactions is starting to look more favourable. “Steady monthly increases in global transaction volume since May 2009 demonstrate that the industry is recovering from the trough in investment activity,” said de Haast. “With the number of distressed sellers on the rise, and a number of transactions approaching their closing dates, we expect to see higher hotel transaction activity in the second half of 2009.”