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 Lodging Property Index Designed to Measure the Total Return of Lodging Property Investment Consistently
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Developed by AH&MA�s IREFAC and Cornell University Hotel School
 
Ithaca, NY - January, 1999 - The Lodging Property Index is a report of the AH&MA�s IREFAC and the Cornell University Hotel School designed to measure the total return on lodging property investment consistently during each quarter.  Total return includes income return, based on net incomes generated by properties, and capital return, based on the change in the capital value of properties.  Returns are reported for selected lodging market segments and for geographic regions.  The index serves all who have a interest in the investment performance of lodging properties.

During the past three decades, the ownership of lodging properties in the U.S. has transformed from a market dominated by individual owners to a market in which the properties are held by corporations, institutions, and investment funds.  One implication of this transformation is the need for more reliable information on the returns to lodging property investments because of the manager/owner responsibilities these investors have to shareholders and pensioners. 

The lack of investment benchmarks limits the hotel industry�s access to the capital markets.  No rate-of-return indexes existed prior to the creation of the Lodging Property Index (http:/hotelschool.cornell.edu/lpi/).  A 1995 study at the Cornell University Hotel School found that available industry data on property performance could not be assembled to provide adequate total investment return measures.  The situation is different for other classes of real estate.  Since 1978, the National Council of Real Estate Investment Fiduciaries (NCREIF), has produced total return indexes for various property classes by geographic region within the U.S. on a quarterly basis.

Recognizing the information void, the American Hotel and Motel Association (AH&MA), through its Industry Real Estate Financing Advisory Council (IREFAC), and the Cornell University School of Hotel Administration joined to produce a quarterly total return index for lodging properties.  The inaugural issue of the AH&MA�s IREFAC Lodging Property Index reported on income, capital, and total returns for 249 properties during the fourth quarter of 1995.

Results from the fourth quarter 1995 mark the beginning of a historical series of lodging property returns through the second quarter of 1998�one that is comparable to the NCREIF property index.  The LPI is computed for the lodging market in the U.S. and includes three market segments: Economy, Midprice, and Upscale, and by four geographic regions: East, Midwest, South, and West.  The number of properties in the LPI has steadily grown since 1995. 

The Lodging Property Index is for information purposes only and does not constitute a recommendation or solicitation for purchase or disposition of any property or security.

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Contact:
Jack Corgel and Jan deRoos, 
Cornell School of Hotel Administration
http:/hotelschool.cornell.edu/lpi/main.htm
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