White Paper: Global Hospitality Insights 2012
02 February 2012
Global Hospitality Insights: Top Thoughts For 2012
2011 started on a strong note for the hospitality industry. Significant improvements were achieved in lodging performance indicators in most regions of the world, the global hotel transaction market showed heightened activity and significant amounts of capital were raised to invest in the sector. An observable influx of foreign investment in US real estate was welcomed, a new monetary policy was established and the US Government emphasized stimulus programs for the lending markets.
However, global economic and political events, such as the Arab Spring, natural disasters in Asia, the S&P downgrade of US sovereign debt and the European debt crisis during the second half of the year, and continuing signs of weakness in the US housing market destabilized the recovery. These economic concerns created a more uncertain environment for lodging companies and investors to grow via low risk acquisitions, divest underperforming assets and seek to refinance existing properties. These dynamics contributed to difficulties for asset valuations.
Despite the hurdles experienced in the second half of 2011, the lodging sector is expected to continue its recovery in 2012. Transaction activity is anticipated to improve with a focus on core assets in key gateway markets. At least in the initial months of 2012, debt financing is expected to remain scarce, requiring investors to be resourceful. International travel and tourism volumes, driven by the burgeoning BRIC economies, are anticipated to increase. Furthermore, mega events in Europe and South America from 2012 through 2016 will impact the global hospitality sector. As owners and operators strive to enhance value and competitiveness, industry best practices, such as sustainability and brand refreshment, will remain top of mind throughout the year.
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