As the hospitality industry continues to improve, much has been said about its profitability in comparison to its prerecession numbers. Well, we may not have many more of those discussions in the future, as a new report from Moody’s/RCA Commercial Property Price Indices shows that March hotel prices were just one percentage point short of their prerecession peak.
According to National Real Estate Investor, the report showed that hotel prices were up 33 percent over the past 12 months, citing strong property fundamentals and an influx in investor activity. A January report from Jones Lang LaSalle estimated that global hotel acquisition volumes would reach $68 billion in 2015, with $34.5 billion taking place in the U.S.
Meanwhile, a report from Real Capital Analytics also showed that investment sales of U.S. hotels rose 68 percent in Q1 2015 to $12.9 billion. Cap rates averaged 8 percent, 36 basis points below what was recorded during Q1 2014, and average prices are up 47 percent to $199,462 per unit. As a barometer, at least four hotels sold for more than $1 million per room in the first three months of 2015.
International travel, however, is expected to slow. National Real Estate Investor cited a report by RBC Capital Markets REIT analyst Wes Golladay where he mentioned overseas tourists accounted for 46 percent of the 74.7 million international travelers to the U.S., which may be affected by the fall in the value of foreign currencies.
"International tourism remains the wild card for 2015; we expect a slowdown, but not a collapse," Golladay said.
But at home in Asia, Travel Daily Media reported that hotels in Bangkok, Beijing, Manila, Shanghai and Tokyo recorded an 18 percent increase in revenue per available room (RevPAR) during Q1 2015. In raw numbers, RevPAR reached $192 in 2015 so far, compared to $162 during the same period last year. This growth was driven by an increase in occupancy, which is up 8 percent to 68 percent.
Additionally, hotels in the UAE continue to post positive numbers despite drops in oil prices. A report from PwC showed that occupancy was the primary driver for Abu Dhabi's growth in 2014 (9 percent), and while Dubai's occupancy fell 1.8 percent it still ranks higher than Abu Dhabi's. PwC forecasts Abu Dhabi to be primed for RevPAR growth of 6.7 percent, but outperformed by Jeddah at an expected 7.3 percent. Dubai is expected to decline in RevPAR again in 2015 (down 2.4 percent) but is forecasting an increase in 2016 of 6.6 percent.