CBRE Hotels released some interesting findings from their historical analysis of U.S. hotel sale data from 2009 through Q1 2012. Some highlights:
- Between 2009 and 2011, overall cap rates for full-service hotels moved from 8.27% to 7.43%, a change of 84 basis points. From Q1 2011 to Q1 2012, the cap rates showed an increase of 142 basis points from 6.94% in 2011 to 8.36% in 2012; however, this increase is likely due in large part to the smaller data set of full-service properties sold in 2012 and a shift in the investment characteristics for such properties.
- Between 2009 and 2011, cap rates for limited-service hotels moved from 9.46% to 8.95%, a change of 51 basis points. From Q1 2011 to Q1 2012, the cap rates showed a decline of 95 basis points to 9.1%.
- Between 2009 and 2011, the average sales price per room for full-service hotels moved from $101,359 to $162,181, and in Q1 2012 average price per room was $263,254 versus $161,357 for the same quarter in 2011.
- Between 2009 and 2011, the average sales price per room for limited-service hotels moved from $57,686 to $56,404. In the first quarter of 2012, the average price per room increased to $80,614 from $56,737 during Q1 2011.
Here’s a whale of a transaction: Penn National Gaming has entered into a definitive agreement to acquire the stock of the Harrah’s St. Louis gaming and lodging facility from Caesars Entertainment for total consideration of approximately $610 million.
The transaction price represents a multiple of approximately 7.75 times the property’s trailing 12 month earnings before interest, taxes and depreciation and will be funded through an add-on to Penn National’s existing Senior Secured Credit Facility. The transaction, expected to close in the second half of 2012, is subject to customary closing conditions and regulatory approvals. Upon closing, Penn National will re-brand Harrah’s St. Louis with the company’s Hollywood-themed brand.
Speaking of transactions, panelists of the opening general session of the Meet the Money conference Tuesday said lenders are “extremely selective” in the deals they choose to take on, reports HotelNewsNow.com’s Shawn A. Turner. “They have so many projects thrown at them, they really have their pick,” said Jonathan Falik, a managing director at Cantor Fitzgerald & Company.
Debt yield is the underlying force behind underwriting today, Falik said. However, he added, some lenders are willing to sacrifice debt yield for cash flow.
Benjamin Leahy, a managing director at Goldman Sachs, said the firm is underwriting to debt yields of between 9% and 13%. “We don’t go above 80% (loan-to-value) on an appraised basis,” he said.
Turkey's rise within the international business community and correspondingly within the world of travel and tourism has created a vibrant opportunity for hotel developers, owners and operators alike. But for every opportunity there is a challenge, explains HotelNewsNow.com Contributor Daniel Englender.
For one thing, building a hotel in Turkey is not like building a hotel in the European Union. Some of these differences can benefit projects, while others generally cause problems for the uninitiated. For example, there are no official Turkish Fire Rating standards for carpet, curtain or upholstery fabrics to protect the safety of guests. On the face of it, this makes it easier for interior designers and developers as they do not need to worry about certification, but international operators have their own brand standards applicable outside of any local legislation.
Read more about the cultural and operations differences of developing and operating hotels in Turkey in “Local knowledge key to development in Turkey.”
Despite a lot of negative press (ours included) detailing the challenges facing the Caribbean hospitality industry, all is not lost, reports HotelNewsNow.com’s Jeff Higley from the Caribbean Hotel & Resort Investment Summit.
Partially fueling the renewed—albeit limited—optimism is a renewed interest in high-end residential components at mixed-use projects.
“We’re seeing more interest in residential (components),” said Kenneth Blatt, principal and COO of Hospitality for Caribbean Property Group. “Slowly but surely people are coming back; but it’s a trickle. It’s been very encouraging the last 60 days.”
CPG is in the final stages of redeveloping the former Dorado Beach Resort in Puerto Rico into a Ritz-Carlton Reserve property that will have a 115-room hotel as well as two-, three- and four-bedroom residential villas that sell for up to $1,200 per square foot. The hotel is scheduled to open in December. Blatt said the high-end consumers of the residential market are recognizing that the hotel is nearly complete and that now is the time to take advantage of the economic environment to invest.
Compiled by Patrick Mayock.