Greenness, wellness, and distinctiveness are important themes, according to firms active in the hospitality sector.
Transaction volume in the sector is predicted to reach nearly billion this year—about 10% higher than last year, which was more than 30% higher than the year before. Half of lenders recently surveyed by STR, Robert Douglas, and expect their overall hospitality volume to at least match 2013’s strong showing, and 35% say they will increase hotel lending significantly or moderately.
Travel research consulting firm STR says nearly 3,000 construction projects were active at the beginning of 2014 in the U. “It feels good out there in the market,” says Robert Stiles, Principal and Managing Director at Robert Douglas.
Many major cities worldwide have seen strong economic recovery that justifies lodging investments, and growth is moving into secondary markets, especially in the Americas and Europe, according to JLL’s “Hotel Investment Outlook: Global 2014." However, conference and group business hasn’t reached pre-recession levels, and worries about the fairly soft world economy are making many players risk-averse.
REITs are looking for acquisitions in key gateway cities.
The movement is centered around existing assets—renovation and repositioning work—and less ground-up.” 1.
Demand for sustainable, healthy, locally authentic properties, with an eye toward attracting Millennials. Adaptive reuse of interesting non-hotel buildings that provide a strong sense of place and, often, tax advantages. Renovation of existing hotel properties to meet pent-up demand and rising consumer expectations. Renewed popularity of large projects mixing hospitality, residential, workplace, entertainment, sports, and other functions. Rise of the value-oriented “select-service” category, bridging the gap between luxury and economy.
In many cases, projects are being shaped not only by economic trends but also by owners’ need to attract Millennials, whose tastes tend to differ from those of their Boomer parents.
Cautious clients are asking their AEC partners for a high level of responsiveness.
“Costs continue to drive the market,” says Don Harrier, AIA, Principal and Senior VP, HKS Hill Glazier Studio.
“How quickly and efficiently a hotel can open is what makes that project attractive to an equity partner.
The luxury market generally remains slow, while small, efficient, yet chic hotels in select markets, as well as large convention hotels in urban areas, are what’s hot.