Our sister media arm, Hospitality Insights, has published a piece that dives into how interest rates are impacting hotel investment globally and how decisions by the U.S. Federal Reserve and European Central Bank in order to tamp down inflation are, in turn, making hotel investors more skittish and risk averse.
"The effect of higher interest rates is already impacting the transaction market," said Michael Bellisario, a senior research analyst covering real estate at RW Baird. "Debt is more expensive and loan-to-value ratios are lower, which have negatively impacted the prices that buyers, particularly private equity buyers, are willing to pay for most assets. Seller expectations are generally unchanged because fundamental performance remains solid. Taken together, the bid-ask spread has widened a fair amount since the onset of the capital markets volatility in May, and fewer transactions are occurring as a result."