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DLA Piper 2012 Hospitality Outlook Survey Reveals 'Strong' Appetite for Deals

Near-Term Deal Flow Expected to Continue, Led by Private Equity Investors
(Los Angeles) January 23, 2012 – The expectations of US hospitality executives have tempered, but the overwhelming majority remain bullish on the marketplace as investors look to pick up where they left off in 2011 – hunting for deals, according to the DLA Piper 2012 Hospitality Outlook Survey revealed today at the Americas Lodging Investment Summit. With that in mind, the US hospitality industry will also keep a watchful eye on Washington, DC in 2012 as the country prepares for further political gridlock amid another election-year showdown for the White House.
The survey, measuring the attitudes and perspectives of top executives within the hospitality industry, reveals that eight out of 10 respondents describe their 12-month outlook for the US hospitality industry as “bullish,” down from 88 percent in 2011. According to respondents, a strong appetite exists for hotel transactions, fueled in part by an expected – and significant – uptick in private equity investment activity, as well as flattening asset values. These factors are expected to far outweigh any concerns over hotel debt issues or any election-related market malaise in 2012.
Taking a look at the operational side, the emergence of “daily deal” websites has created an interesting promotional opportunity for the US hospitality industry. While only 19 percent of respondents reported using these sites for promotions, nearly all those who did cited them as a source of repeat business.
“Enthusiasm remains high but the hospitality marketplace is in a period of transition,” said Sandra Kellman, global co-chair of DLA Piper’s Hospitality and Leisure practice. “Looking ahead, it is clear that the industry expects that there will be some deal velocity, although it may be choppy.”

According to DLA Piper, the survey yielded a number of other interesting conclusions, including:
  • 80 percent of respondents describe their 12-month outlook for the US hospitality industry as “bullish,” down from 88 percent in 2011.
  • For the second consecutive year, 9 out of 10 respondents believe that market conditions have created good buying opportunities for well-capitalized investors.
  • 78 percent of respondents believe that the political gridlock in Washington, DC poses a chief threat to the recovering US hospitality industry.
  • Only 47 percent of respondents expect hotel asset values to rise in 2012, down sharply from 82 percent of respondents in 2011.
  • Private equity investment is on the upswing: 76 percent of respondents expect private equity investors to be the most active in 2012, jumping up from 40 percent in 2011.
  • 9 out of 10 respondents expect that the industry’s “debt hangover” will force more hotel properties into the marketplace in the coming year.
  • Representing the first drop in three years, 29 percent of respondents expect that their hotel debt will be refinanced or restructured in 2012 – down from 37 percent in 2011.
  • Only 19 percent of respondents participated in “daily deal” website promotions in 2011, but of these respondents, 90 percent cited these deals as sources of repeat business.
  • Respondents rank TripAdvisor and Expedia as the two most influential websites for travel customers, easily trumping the influence of social media’s “Big Three” – Facebook, Twitter and LinkedIn.
Respondents were asked to share their thoughts on the following in an open forum for comment and feedback. The following represent select verbatims received from survey respondents.

Have daily deal websites been a boon or bust for the hotel industry? Explain:
  • Boon. They have helped to boost short term sales.
  • Boon. The arrival of daily deals in consumers’ inboxes gets everyone thinking about traveling again. We should not underestimate the amplification.
  • Boon. Fills otherwise empty inventory.
  • Boon, can sell excess inventory at a lower fee than the OTA’s like Expedia.
  • Bust. Economically unattractive.
  • Bust. It is not the way people buy travel.
  • Bust. Too many options. No real substance or organization.
  • Yes and no. Yes, because it drives business; no, because it depresses rates.
  • Neither, just a different distribution channel. Helps to offset the decline in forward booking pace seen with slowdown in corporate and group bookings.
  • Neither: They provide an outlet for short-term windows of availability. Not a significant driver of business, but rather a filler.
  • They are, and continue to be, a threat to commoditizing our industry.
  • Probably a good thing overall, but it’s up to operator to yield manage.
In January of 2012, DLA Piper distributed a survey via email to top executives within the hospitality industry, including CEOs, COOs, CFOs and other senior executives, which was completed by 100 respondents.
Question No. 2 was only made available to those respondents who described themselves as “bullish” in Question No. 1.
Question No. 3 was only made available to those respondents who described themselves as “bearish” in Question No. 1.
Question No. 6 was only made available to those respondents who answered “yes” to Question No. 5.
Due to rounding, all percentages used in all questions may not add up to 100 percent.

To view the entire survey please visit:

About DLA Piper: (
DLA Piper has 4,200 lawyers in 30 countries and 76 offices throughout the United States, Europe, Asia Pacific and the Middle East. In certain jurisdictions, this information may be considered attorney advertising.

Sandra Kellman
Global Co-chair and Head of Hospitality & Leisure Group US, DLA Piper

Brian Kiefer
Media Relations

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