Hotel Online Special Report 
Global Study, Hospitality 200: The Capital, Indicates Location is Consistently Ranked as the Number One Factor Affecting Hotel Investment and Lending Decisions New York- June 5, 2000 – Findings from Hospitality 2000: The Capital, a major international study released today by Arthur Andersen, the New York University Center for Hospitality, Tourism and Travel Administration, and Hospitality Financial and Technology Professionals, reveal that investor attitudes toward hotel property are currently more positive than negative.
Additionally, there is a strong preference toward international hotel chains, and a marginal preference for four-star versus five-star product.
Hospitality 2000: The Capital explores current and future capital sources, market structures, investment and lending preferences, approaches to underwriting, investment metrics, property market trends and lender attitudes.
The results were announced today during the 22nd Annual New York University International Hospitality Industry Investment Conference at the New York Marriott Marquis Hotel.
Comments Roger Cline, a partner at Arthur Andersen who co-authored the study with Dr. Mark Warner of NYU, “The survey results across the board were indicative of greater awareness and experience with New Economy realities such as globalization, the revolution in communications, consolidation in the industry, and technology. Both investors and lenders appear to have similar preferences. They generally want to stay with quality and size when it comes to property, and seek large branded management companies to operate the business.
The study confirmed a broad array of investment and underwriting parameters, and should be of great value to those evaluating capital commitments to the hospitality industry.”
An overview of the findings:
- Private equity capital drives hotel property markets, while public capital markets dominate hotel company financing.
- Investors and lenders prefer large hotel companies with recognized brands, and full-service hotels and resorts over smaller, limited service property and extended stay facilities.
- Given a choice, investors prefer office, residential and retail property over hotels.
- On the property front, private investment and venture capital funds are ranked as the most significant source of equity capital today on a global basis, followed by hotel companies both public and private.
Although the pace of consolidation is viewed to be generally moderate (59 percent), consolidation is clearly seen as one of the most important forces in the industry today, even though the survey respondents believe that mergers and acquisitions often do not produce the benefits sought. Of note, the respondents indicated that the need to improve access to capital was the least significant driver to further consolidation of the hospitality industry in the future. The top ranked factors were focused on market share, distribution and brand acquisition.
With regard to the future popularity of hotel REITs in the United States, just over two thirds of Americas respondents believe that the REIT form will diminish in popularity either moderately (27%), or significantly (41%).
Lender and investor attitudes toward tangible vs. intangible assets are beginning to shift. While respondents still have a preference for investing in hotel property, other types of assets come next, including brands, human capital, technology, customer information and strategic alliances. Most respondents indicate that measuring the return on intangible assets is important now, and will be in the future.
Investor attitudes toward hotel property are currently more positive (52%) than negative (44%), with positives expected to increase in the future. On the enterprise side, the negatives for investors are currently marginally higher than those for property (47% versus 44%), while in the future, the positives are expected to increase to 66%.
In Europe, the Middle East, India and Africa (EMEIA) and Asia-Pacific, individual investors and financial institutions are likely to have an increased appetite for hotel property and acquisition in the future. By region, hotel acquisition volumes are expected to increase the most in the Americas and EMEIA, and less so in Asia-Pacific.·
As to foreign investment in hotel enterprises, EMEIA respondents indicate the greatest prospect for increased investment (83%), while in Asia-Pacific there is a more moderate view (67%), and in the Americas the most conservative view (31%). More than half of respondents (57%) indicate their organizations have a formal information technology (IT) budgeting process involving the senior management team. Once capital is invested in IT, however, it is frequently forgotten as suggested by 61% of respondents who report having no formal measurement system in place to monitor its IT investment performance.
Summarizes Dr. Mark Warner, director for graduate programs, New York University’s Center for Hospitality, Tourism and Travel Administration, “This study makes a great textbook for a class on hospitality investment and valuation. It sets a current and near-term view of the fascinating and complicated world of hospitality capital.” Hospitality 2000: The Capital, is the fourth in a series of global studies being created under the Hospitality 2000 banner that define some of the critical issues that the hospitality industry will face in the next millennium.
The School of Continuing and Professional Studies (SCPS) at NYU was founded 65 years ago as a separate school within the University. Today it is the leading and largest institution of its kind in the nation, with annual enrollments of nearly 70,000 in its many professional development and degree programs. SCPS is focused on serving individuals at any stage of life, and on providing professional education across a wide spectrum of industries that continually demand new sets of high-level skills.
As the authoritative information source for hospitality finance and technology information, HFTP is the professional association for financial and IT personnel in the hospitality industry. The association provides continuing education and networking opportunities to more than 4,000 professionals around the world. In addition to producing the annual Hospitality Industry Technology Exposition and Conference (HITEC), HFTP also administers the examination and awards the certification for the Certified Hospitality Accountant Executive (CHAE) and the Certified Hospitality Technology Professional (CHTP) designations. HFTP was founded in 1952 as the National Association of Hospitality Accountants.
Arthur Andersen’s vision is to be the partner for success in the new economy. The firm helps clients find new ways to create, manage and measure value in the rapidly changing global economy. With world-class skills in assurance, tax, consulting and corporate finance, Arthur Andersen has more than 77,000 people in 84 countries who are united by a single worldwide operating structure that fosters inventiveness, knowledge sharing and a focus on client success.
The complete study is available for US$125 by calling toll free (800) 872-2454 (U.S.) or +1(941) 341-2020 (worldwide), or via email at [email protected]. The complete study is available for US$125 by calling toll free (800) 872-2454 (U.S.) or +1(941) 341-2020 (worldwide), or via email at [email protected]. Contact: Antony Yee Hospitality and Leisure Services Arthur Andersen, San Francisco (415)281-8156 [email protected] http://www.arthurandersen.com www.scps.nyu.edu www.hftp.org