The value of global hotel investment deals has slumped by 64 per cent this year but the market is expected to rebound in 2010, according to an annual review of transactions by Jones Lang LaSalle Hotels.
Some $9bn in transactions is predicted to have been made this year, compared with $24.8bn last year, and less than 10 percent of the $113bn of 2007.
Jones Lang LaSalle predicts that transactions for next year will be in the $11-13 billion range. It predicts single hotel transactions will be the driver for growth, rather than large portfolios.
The deals will mostly be regionally based, reflecting the continuing decline in cross-border activity as investors remain risk-averse in the downturn.
However it also predicts that Asian conglomerates will take advantage of currency movements to acquire prime hotel assets in the US and the UK. They will be joined by sovereign wealth funds from the Middle East and Asia, which will want to place capital in hotels to hedge against inflation.
The absence of traditional lending will lead to alternative investment vehicles, including public floatation, rights issues and real estate investment trusts.
The hospitality industry has avoided large foreclosures this year due to lenders extending loans to hard-pressed hotel owners.
Arthur de Haast, chief executive of JLL Hotels, said: “As more assets are placed under the control of banks, we expect more of the upcoming sales activity to be driven by banks, which will provide a lift to hotel transaction volumes.
“Particularly in the US and Europe, banks are reviewing their loan portfolios and determining their next steps. But the number of distressed assets on the market will not come in form of a tidal wave.”