Room with a view

In the midst of the global economic crisis, the latest news from the hotel industry is refreshingly positive - property investors in the hotel sector will be heartened to hear that Ernst & Young LLP - the US arm of Ernst & Young Global - recently released a report about trends in the global hotel industry which found the industry is remaining profitable in the face of recession...

The US 2009 Lodging Report contains an overview of the global hotel sector (including the US) as well as in-depth analysis of the main segments and market reports for 17 major US cities The report notes that despite economic decline across most major regions of the world in 2008, operating performance in the global hotel industry remained profitable as hoteliers focused on controlling costs.

The report also features trends to watch in the hotel sector in 2009 and several of them are important for property investment in the hotel industry. One important Change they expect is that hotels will become part of mixed-use developments, alongside office and residential properties, and more and more hotels will be environmentally friendly.

Green hotels are gaining momentum worldwide, particularly in the US and Governments are promoting green hotels and renovations and will penalise those with large carbon footprints.

In the US in particular, it's thought that Government stimulus programmes which mean investment in infrastructure, will have a positive effect on the hospitality sector because of improved access to major tourist destinations. In addition, the timeshare and cruise sectors of the hospitality industry - traditionally competitors for business - have been hard hit by the economic downturn.

One notable point for investors is that because hotel values dropped in 2008 and will continue to do so in 2009, cash-rich buyers are waiting in the wings to invest once prices become even more attractive.

This was also clear from another recent Ernst & Young LLP survey of US real estate investors, which revealed that 60 per cent intended to take advantage of distressed sale prices and buy commercial real estate.

James Gonzalez, Market Analyst at Obelisk Investment Property says that the Ernst & Young report is positive for investors in the hotel sector. "It's interesting that they are also flagging up regions outside the traditional markets of western Europe and the US. "Those regions with healthy and growing economies, big populations and a relative scarcity of hotels are the ones to watch. This supports Obelisk's own research which highlights Eastern Europe and Brazil," he added.

Source: www.obeliskinvestmentproperty.com