Rising profits, limited supply growth and improved access to capital indicate that the U.S. lodging industry is ripe for investment, according to Hospitality Investment Survey results released Sept. 19 from PKF Consulting, a firm that specializes in the valuation of hospitality properties.
Conducted in the spring of 2013, the survey tracked changes in investment and financing in the lodging industry over the previous12 months.
The survey revealed that revenue per available room is expected to grow 6 to 7 percent in most major U.S. lodging markets during the next year due to limited supply growth. Net operating income also is expected to improve more than 10 percent through 2015 due to continued revenue growth in the hotel sector.
The survey noted that because interest rates for hotel development and acquisition purposes remain at historically low levels, the dividend yield from a hotel investment looks very attractive given the reduced risk.
Investors and lenders who participated in the survey showed optimism for the future of the hotel industry, and, due to the lack of high-quality assets being marketed for sale, said that they expected the transaction activity of well-branded assets in second-tier and tertiary markets to increase over the next 12 to 18 months.
“It has been a while since we have seen such a convergence of positive operating fundamentals and a favorable, yet practical, financing environment,” Scott Smith, MAI, vice president in the Atlanta office of PKF, said in a news release accompanying the survey results.