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Hotel Buys Will Soar With Room Rates, Jones Lang LaSalle Says

Hotel acquisitions will increase this year as real-estate investors react to rising occupancy and room rates, according to a Jones Lang LaSalle Inc. executive.

Lodging purchases will gain 15 percent to 20 percent to about $30 billion in 2011, Arthur de Haast, global chief executive officer of the broker’s hotels unit, said in an interview at the International Hotel Investment Forum in Berlin. The volume of deals will rise the fastest in the Europe, Middle East and Africa region, where the executive expects an increase of as much as 25 percent.

Hotel rates will gain this year as a recovery in business travel fills more rooms, lodging companies including Marriott International Inc., the biggest hotelier in the U.S., said yesterday in Berlin. Leisure travel is also rebounding after consumers trimmed spending during the recession. Revenue per room in the hotel industry rose worldwide in 2010, according to researcher STR Global.

“In 2011 we will see more deals with what we describe as secondary type assets,” the executive said. Banks are pushing owners of hotels that are outside city centers to sell the assets, he said.

Hotel purchases peaked at $120 billion in 2007 and won’t reach more than $100 billion again for five to 10 years, de Haast said. Deal volume rose to $26 billion last year from a $9 billion low in 2009.

Most deals last year were in the luxury sector, including the sale of Geneva’s Le Richemond and Hotel de Crillon in Paris, or involved securing income through existing leasing contracts, de Haast said. This year, investors are taking greater risks as the industry recovers, according to the executive.

Future growth will be driven by deals in emerging countries rather than in mature markets, according to de Haast. “Chinese insurance companies will buy Chinese hotels and Indian insurance companies will buy Indian hotels,” he said.

Jones Lang LaSalle, based in Chicago, had $2.93 billion in revenue last year from real estate services and investment management. The hotels unit is based in London.

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