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by: Jeffrey H. Walker, MAI, CHME February 20, 2009
In fact, ADR growth expectation actually turned negative in the current survey, the first time this has occurred in survey history. With expense growth outpacing revenue growth expectations, NOI growth will remain challenged, leading to the reduction in the spread between the going-in capitalization rates and the discount rates in the survey results. The direct capitalization rate for full-service hotels of 9.8% in the current survey is 160 basis points higher than the average for the Mid-Year 2008 survey. The complete Winter 2009 survey, including data on capitalization rates, discount rates, income and expense growth expectations, marketing time, debt parameters, and other data for both full-service and limited-service hotels, can be ordered through the company�s website at www.usrc.com, and clicking �Publications.� Jeffrey H. Walker, MAI, CHME is Principal and Managing Director of US Realty Consultants. He is a 1985 graduate of James Madison University and has been involved in the hotel and restaurant industries since the 1970�s. He spent much of his career with Hyatt Hotels and Resorts, and has been a hotel consultant since 1992. He can be reached at 614-221-9494 (ext 150) or at [email protected]. |
The
Winter 2009 USRC Hotel Investment Survey indicates that the increase in
capitalization rates for both limited-service and full-service hotels has
accelerated, with rates now at their highest levels in five years. Rates
had been gradually increasing since record lows demonstrated in the 2007
surveys. Although the increase in discount rates was sharp compared to
recent more gradual movement, there was still less movement in overall
discount rates compared to going-in capitalization rates, which continue
to be heavily impacted by slowing growth expectations in ADR.