Sales of hotels have exceeded growth of all commercial properties including purchases of office buildings and shopping complexes.
Hotel sales have jumped 136 percent in the first six months in 2010 relative to the same period in 2009, based on research conducted Real Capital Analytics of New York. The data was compiled based on sales of hotels of $5 million of higher in value.
The current trend has been partially related to the increase in business and leisure travel whereby the travel industry is recovering from the lowest occupancy rates in the last 30 years. The lucrative nature of the hotel business banks on the ability to be flexible on rates, and to respond to economic growth, and consumer demand. Other commercial properties may not be able to be as reactive given the longevity of leases and long term agreements.
“Hotels have already absorbed the downturn,” said Richard Jones, executive vice president of acquisitions and operations at Atlanta-based developer Portman Holdings LLC in an interview with Bloomberg. “It’s not as evident what exactly the impact of this downturn is going to be for other commercial real estate.”
Moreover, Lewis Wolff, cochairman of Sunstone Hotel Investors Inc., an Aliso Viejo, Calif.-based real estate investment trust, commented that hotel space is rented by the night, not the month or year. As such, hotels are a better investment than other properties during a boom and worse during a bust, he noted.
Income for hotels is increasing, according to Smith Travel Research Inc. of Hendersonville, Tenn., whereby revenue per available room in the top 25 U.S. markets, rose to $73.87 during the first half from $71.08 a year earlier.
However, hotel occupancy figures are still struggling. Besides economic factors, the impact of technology has also influenced traveler habits. The possession of cell phones and laptop computers has resulted in the hotel phone’s virtual redundancy as well as the purchase of in-house films.
“Occupancy is starting to inch up,” said Jeff Higley, a spokesman for Smith Travel Research. But analysts predict room rates may not recoup to pre-recession levels for at least two or three years because managers are reluctant increase charges substantially. Revenue from phone calls and in-room entertainment is virtually nonexistent.
Annual revenue collected by U.S. hotels from phone calls dropped to an average of $178 per room in 2009 from $1,252 in 1999, a decline of 86 percent, according to Colliers PKF Hospitality Research. Income from in-room movies and games rentals dropped to $126 per room from $171, a decline of 26 percent, according to the research house.
Hotel sales have jumped 136 percent in the first six months in 2010 relative to the same period in 2009, based on research conducted Real Capital Analytics of New York. The data was compiled based on sales of hotels of $5 million of higher in value.
The current trend has been partially related to the increase in business and leisure travel whereby the travel industry is recovering from the lowest occupancy rates in the last 30 years. The lucrative nature of the hotel business banks on the ability to be flexible on rates, and to respond to economic growth, and consumer demand. Other commercial properties may not be able to be as reactive given the longevity of leases and long term agreements.
“Hotels have already absorbed the downturn,” said Richard Jones, executive vice president of acquisitions and operations at Atlanta-based developer Portman Holdings LLC in an interview with Bloomberg. “It’s not as evident what exactly the impact of this downturn is going to be for other commercial real estate.”
Moreover, Lewis Wolff, cochairman of Sunstone Hotel Investors Inc., an Aliso Viejo, Calif.-based real estate investment trust, commented that hotel space is rented by the night, not the month or year. As such, hotels are a better investment than other properties during a boom and worse during a bust, he noted.
Income for hotels is increasing, according to Smith Travel Research Inc. of Hendersonville, Tenn., whereby revenue per available room in the top 25 U.S. markets, rose to $73.87 during the first half from $71.08 a year earlier.
However, hotel occupancy figures are still struggling. Besides economic factors, the impact of technology has also influenced traveler habits. The possession of cell phones and laptop computers has resulted in the hotel phone’s virtual redundancy as well as the purchase of in-house films.
“Occupancy is starting to inch up,” said Jeff Higley, a spokesman for Smith Travel Research. But analysts predict room rates may not recoup to pre-recession levels for at least two or three years because managers are reluctant increase charges substantially. Revenue from phone calls and in-room entertainment is virtually nonexistent.
Annual revenue collected by U.S. hotels from phone calls dropped to an average of $178 per room in 2009 from $1,252 in 1999, a decline of 86 percent, according to Colliers PKF Hospitality Research. Income from in-room movies and games rentals dropped to $126 per room from $171, a decline of 26 percent, according to the research house.
