Hotel & Motel Management - December 27, 2007 - (Page 55) Expectations Continued from page 44 Another effect of the economy will be the recession that looms over the coming year. “When buyers hear a lot of bad news about the economy, they tend to be more conservative in general,” Davis said. This leads to value decreases anywhere from 5 percent to 20 percent to which sellers must adjust. “They have to realize that the party’s over, and if they’re wanting to sell their as- sets, there’s a new pricing model being implemented in the marketplace,” Davis said. Some areas with high barriers to entry, such as New York and the coasts, consistently are hot spots for sellers. Others are seen as ideal for new construction. But those areas with low barriers to entry, reasonably cheap land and quick approval times, like the Southwest and Texas, likely will get overbuilt and experience stress, Eaton said. Still, it’s not all negative for 2008. Although Marx said the coasts and Chicago saw the most activity in 2007, he anticipates the Midwest will be a stronghold in ’08 be- “Credit markets will continue to tighten, but experienced and savvy operators will grow their portfolios.” –STEVEN MARX, PRESIDENT, HOTEL SOURCE cause of reasonable pricing and more stable real-estate values. Davis said midmarket, limited-service hotels will give good yield in 2008. Conversely, Marx said select-service and upbranding opportunities were big trends in 2007, but 2008 will bring increased value to the full-service segments. Plus, with the weakened U.S. dollar, overseas investors are eyeing the U.S. lodging industry. Asian investors tend to eye the West Coast, while Europeans favor major cities on the East Coast, Davis said. The weakened dollar also could bring more tourists from abroad, Eaton said. Even on the domestic-investor front, the strong performance of the lodging industry bodes well. “Hotels still represent a safe haven to get return on investment,” Davis said. “Hotels are going to be an important part of anybody’s portfolios.” ehanna@questex.com NEPTUNE HOSPITALITY ADVISORS FINANCING & EQUITY PLACEMENT - HOTEL REAL ESTATE BROKERAGE - ADVISORY SERVICES Neptune provides a full spectrum of capital advisory services including mortgage brokerage, joint venture capital raising, property sales and asset advisory services to the hospitality industry. Working with a wide variety of hotel owners, investors, and capital sources, Neptune has completed over $1.5 billion in hotel and resort transactions across the United States and Mexico. 8910 University Center Lane, Suite 420 San Diego, CA 92122 858.964.5678 (California) 512.868.5107 (Texas) www.neptuneha.com http://www.neptuneha.com http://www.neptuneha.com
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