The Hotel Times - March 2008 - (Page 17)

EUROPEAN OUTLOOK Dominance of private equity is giving way to sovereign wealth funds. UK: Sterling 2.1 1.9 1.7 1.5 1.3 1.1 1997 1999 2001 2003 2005 2007 Source: Haver Analytics US$/£ Euro/£ by economy brands on price and, in addition, losing out on the higher-end traveler as they are unable to match the luxury brands on either quality of service or facilities. U.S. capital gives way to oil money The credit crunch has slowed hotel transaction activity by U.S. investors to a minimum, while the weakening U.S. dollar has further decreased the attractiveness of European assets for U.S. investors and made Europe more expensive as a travel destination. The re-pricing of debt in 2007 has meant that largescale leveraged transactions are less likely in 2008. While the strength of the asset base and good visibility of future income mean quality hotels continue to attract investment, the dominance of private equity funds is being strongly challenged by sovereign wealth funds. We expect this to continue in 2008, with more transactions being completed by these new key investors in the European market. Quality assets will continue to ﬁnd interested purchasers, though decreased leverage will place upward pressure on capitalization rates and downward pressure on prices. For U.K. sterling, the exchange rate against the Euro fell in 2007, making mainland Europe investments expensive for U.K. companies. However, the cost to visit the U.K. is falling, and this is helping drive occupancy and RevPAR growth. The combination of lower interest rates and the marked worsening of the U.K.’s account position means sterling is likely to remain under pressure. hmm@questex.com March 2008 The Hotel Times 17 http://www.grouprci.com/ht1 http://www.grouprci.com/ht1

Table of Contents Feed for the Digital Edition of The Hotel Times - March 2008

The Hotel Times - March 2008 Business Outlook Editorial Outlook Contents Conference Preview Capital Outlook What's Driving Growth? European Outlook Development Outlook Fractional Outlook Branding Source List Insurance Outlook Brokers Update Brokerage Outlook Lodging's Balancing Act Transactional Facts Lending Outlook Lenders Source List In Closing

The Hotel Times - March 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.