“ THE FUNDAMENTALS REMAIN STRONG . OCCUPANCY GROWTH IS CONTINUING . PRICING POWER IS INCREASING . INVESTOR FOCUS HAS BEGUN TO SHIFT FROM PRIMARY TO SECONDARY MARKETS , AND I WOULD EXPECT THAT TO CONTINUE NEXT YEAR .”
THE PIPELINE : NORTH AMERICA
U . S . PIPELINE
The United States pipeline in October stood at 3,299 projects / 420,608 rooms , a year-overyear increase of 17 %, accounting for 36 % of projects and 27 % of rooms in the global pipeline . Fully , 78 % of hotels in the U . S . pipeline have already chosen a brand . Of those hotels , 76 % of projects and 72 % of rooms are in the upscale and uppermidscale chain scales .
Top five U . S . markets in the pipeline by project count : 1 . New York : 177 projects / 30,049 rooms 2 . Houston : 113 projects / 12,856 rooms 3 . Washington , D . C .: 82 projects / 13,867 rooms 4 . Los Angeles : 63 projects / 12,977 rooms 5 . Miami : 60 projects / 11,583 rooms
Top franchise companies by U . S . project count ( accounting for 61 % of all U . S . projects ): 1 . Marriott International : 626 projects / 78,094 rooms 2 . Hilton Worldwide : 619 projects / 72,137 rooms 3 . IHG : 539 projects / 56,230 rooms 4 . Choice Hotels International : 223 projects / 16,870 rooms
Top five brands in the pipeline by U . S . project count : 1 . Holiday Inn Express : 280 projects / 25,703 rooms 2 . Hampton Inn & Suites : 180 projects / 19,040 rooms 3 . Fairfield Inn : 165 projects / 15,291 rooms 4 . Residence Inn : 128 projects / 16,979 rooms 5 . La Quinta Inn & Suites : 122 projects / 9,249 rooms
Source : Lodging Econometrics
Big players ’ bullish outlook Some of the big players are also bullish on luxury and resort development in the year ahead .
Craig Reid , CEO of Mill Valley , California-based Auberge Resorts , which last year received a cash infusion from Friedkin Capital Partners of Houston , says his company is focused on new construction with a residential component . “ The biggest surprise to me is how many developers out here are looking for more handcrafted products and sort of stating they are looking to move away from traditional luxury ,” he says . “ People are looking for something that has more of a local flavor , but high quality .”
Auberge recently announced a new resort in Sun Valley , Idaho , and is looking at other unique settings , including upstate New York and Tennessee .
Hyatt is also focused on resorts and expanding its new all-inclusive partnership with Playa Hotels & Resorts , Fairfax , Virginia .
Regardless of the sector , experts say , they expect to see the building boom continue for the next few years , fueled in part by an increase in foreign investment .
Pillsbury called the Waldorf purchase a bellwether for continued Asian investment interest in U . S . real estate and hotels . He notes , “ It is influenced by two things : the amount of capital they have available and the recognition that the hospitality business worldwide is going to grow and be very healthy , driven in no small part by the influx of Chinese travelers .”
Transaction story Hotel transaction volume is expected to hit US $ 25 billion in 2014 , and industry players say they expect the momentum to continue as foreign investors , REITs and speculators flood the market .
Jones Lang LaSalle says the activity is being buoyed by rising RevPAR , an abundance of capital , strong debt markets and a resurgence in the resort sector .
Omni Hotels & Resorts , for instance , has purchased six resorts from KSL and renovated another property on Amelia Island , Florida . “ What we like about resorts ,” says Omni ’ s Deitemeyer , “ is there is not really an active pipeline .”
Omni continues to look to add to its resort portfolio , but Deitemeyer says , “ The challenge in today ’ s market is anything for sale is already being priced on these forward RevPAR numbers . We think pricing is getting a little crazy on some of the existing assets .”
New transactions will also be fueled by speculation , as pricing on many existing properties is at or near replacement cost , according to Pillsbury . “ That ’ s going to continue and foster new development ,” he says , much of which will be done by “ early entrants in the market who are likely to be speculators — developers who are not necessarily long-term owners but see a new opportunity to build and sell .”
“ THE FUNDAMENTALS REMAIN STRONG . OCCUPANCY GROWTH IS CONTINUING . PRICING POWER IS INCREASING . INVESTOR FOCUS HAS BEGUN TO SHIFT FROM PRIMARY TO SECONDARY MARKETS , AND I WOULD EXPECT THAT TO CONTINUE NEXT YEAR .”
– LEE PILLSBURY , THAYER LODGING , BROOKFIELD HOTEL PROPERTIES
42 HOTELS December 2014 www . hotelsmag . com