October 2012 - Stephen Rushmore, Jr., President and CEO of HVS, the leading global hospitality consulting and services firm, has announced the publication of the 2012 U.S. Hotel Valuation Index. The Hotel Valuation Index (HVI) tracks hotel values in 66 individual U.S. markets and the United States as a whole. The HVI looks at hotel supply, demand, occupancy, and average rate trends for each market area and creates an income-and-expense projection based on local operating costs.

According to Katharina Kuehnle who co-authored the HVI with Stephen Rushmore, Jr, “Increases in occupancy, average rate, and demand, along with limited growth in supply thus far in 2012, are anticipated to result in relatively strong growth in net operating income (NOI). These improving dynamics, coupled with a fewer buying opportunities, are expected to yield a positive per-room value change for the U.S. in 2012.”

In 2011, the U.S. average change in per-room value equated to an increase of nearly $13,000 over 2010; this value change has resulted in the U.S. ranking 33 out of the 66 total markets reviewed. Ranking first in 2011, with the most significant per-room value increase was Miami, closely followed by San Francisco. Ranking last in 2011, with the most significant per-room decline were Santa Fe and Tucson.

“As the U.S. economy continues to recover, relatively strong increases in demand in the meeting and group segment are expected,” continues Kuehnle. “Therefore, values on a per-room basis for the top three convention cities—Las Vegas, New Orleans, and Tampa—are anticipated to increase the most in 2012.”

“Moreover, Chicago and Nashville are listed under the top ten cities that are expected to realize strong growth. As Tucson’s recovery is lagging behind most U.S. markets, Tucson is expected to increase most in value through 2016. As San Francisco’s and Boston’s per-room values recovered in 2010 and 2011, the upside potential through 2016 is limited; therefore, San Francisco’s per-room value is anticipated to experience a slight decline, whereas Boston’s per-room value is anticipated to experience only minimal growth by 2016.”

Added Rushmore, “According to this 2012 HVI, U.S. hotel values peaked in 2006 at $100,000 per room. The low point during the recent downturn occurred in 2009, when values dropped to $56,000 per room. HVS projects that U.S. hotel value growth will persist through 2016, surpassing 2006 values in 2013.“

Rushmore advises investors to “sell properties in San Francisco, Boston, and Washington, D.C. this year,” whereas he suggests investors “sell properties in New Orleans, Atlanta, Chicago, Philadelphia, and Cleveland in 2013.”

For a limited time, one can download a complimentary copy of the 2012 HVI, at www.hvs.com/Bookstore/#2012USHVI.