European Hotel Sector Review of 2007. Russell Kett Managing Director HVS – London Amsterdam – 16 January 2008. Key Trends for European Hotels. Occupancy and room rate Hotel valuation Transactions. Europe – Still the RevPAR King. Seasonally Adjusted RevPAR. $115. $103. $99. €87. $64.
HVS – London
Amsterdam – 16 January 2008
Occupancy and room rate
Seasonally Adjusted RevPAR
Sources: HotelBenchmark™ by Deloitte; Smith Travel Research
Most locations – RevPAR growth, now mainly rate driven, profits up, values up…
Strong buyer demand prevails – yields unlikely to fall further – now is a great time to sell…
Pre-”crunch” – sale prices might have risen because of increased projected earnings…
Expectation of current buyers is to sell in 3-5 years’ time – who will those buyers be…?
Issues – debt provision, human capital, sustainability – but…
Effect of current market turmoil?
Have we reached the end of the cycle?
US investment market, CMBS – stagnant, nervous
Middle East – no effect yet
Deals in Europe – many stalling, few completed
Larger ones – longer to come to fruition
Quality assets & operators – interest prevails, little or no impact so far
Secondary assets / larger portfolios – tougher
Banks – reducing LTVs 5%–10% points
Interest rates up 50–90 bp’s
Yields moving out by 0.25%–1%
Short term issue – 3-6 months…?