Worldwide deal volume will hit US$32 billion.
As increased transparency paves the way for a conducive investment climate, worldwide hotel deal volume will reach US$32 billion 2013, according to a recent report by Jones Lang LaSalle.
The global estate agent also said a strong list buyers will remain interested in acquiring assets, and the flow of cross-border capital – which accounted for 30% of global hotel investment in 2012 – could accelerate in 2013.
According to Jones Lang LaSalle, previous economic cycles provide clues as to what lies ahead for hotel in the coming year: global debt availability is expected to be at its highest level since 2007; private equity and REITs will dominate purchasing activity with 60% of the global market; and the biggest sellers will be bank-induced refinancing challenges.
The report also indicated that unintentional hotel owners, such as banks and receivers, will continue to drive a significant share of hotel products to market. But among active players, private equity investors will continue to lead the pack, being in a favourable position to achieve opportunistic returns through significant liquidity and risk tolerance.
Specifically, REITs will continue to make major acquisitions in core gateway markets, as they did in 2012. This is particularly true in North America and the Asia-Pacific region where two new hotel REITs in Singapore have been listed.
Meanwhile, funds from the cash-rich Middle East will continue to purchase trophy assets in 2013.
In addition, as large banks will have limited capacity to lend significant sources of new money in 2013, sovereign wealth funds, mutual funds and insurance companies will come in to fill the gap.
The hotel industry is holding strong, said Jones Lang LaSalle. In some cases, it is outperforming expectations. At the forefront are resource-rich cities, which registered impressive growth in revenue per available room. In addition, global travellers will boost demand in popular markets such as Istanbul, Munich, San Francisco, Boston, Sydney and Singapore.