the hotel industry outlook u.s. hotel transactionsthe hotel industry outlook − u.s. hotel...
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The Hotel Industry Outlook − U.S. Hotel Transactions Suzanne R. Mellen, MAI, CRE, FRICS, ISHC Senior Managing Director Hotel and Casino Consulting & Valuation HVS San Francisco, Las Vegas, Los Angeles 415-268-0351 [email protected]
Historical Sales (Total Assets >$2.5M)
Source: Real Capital Analytics (RCA)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
$60,000
$80,000
$100,000
$120,000
$140,000
2005 2006 2007 2008 2009 2010 2011 2012 2013*
$ in
Bill
ions
Pric
e Pe
r Key
Sales Volume Price Per Key
*2013 statistics are preliminary. 2
Historical Sales Volume (Assets >$10M)
Source: Real Capital Analytics (RCA)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
$100,000
$130,000
$160,000
$190,000
$220,000
2005 2006 2007 2008 2009 2010 2011 2012 2013*
$ in
Bill
ions
Pric
e Pe
r Key
Sales Volume Price Per Key
*2013 statistics are preliminary. 3
Historical Sales (Assets $2.5-10M)
Source: Real Capital Analytics (RCA)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
2005 2006 2007 2008 2009 2010 2011 2012 2013*
$ in
Bill
ions
Pric
e Pe
r Key
Sales Volume Price Per Key
*2013 statistics are preliminary. 4
Comparison of $ Sales Volumes
0 5
10 15 20 25 30 35
2005 2006 2007 2008 2009 2010 2011 2012 2013*
$ in
Bill
ions
>$10M $2.5-10M
*2013 statistics are preliminary.
Source: Real Capital Analytics (RCA)
+44.6%
+32.7%
5
Comparison of # Properties Sold
*December statistics are preliminary.
Source: Real Capital Analytics (RCA)
891 1,018 886 587
235 315 531 681
893
622 726
739
278
73 229
425 380
467
0
500
1,000
1,500
2,000
2005 2006 2007 2008 2009 2010 2011 2012 2013*
>$10M $2.5-10M
+22.9%
+31.1%
6
MM Hotel Outperforming in 2013
Source: Real Capital Analytics (RCA)/Moody’s
RCA US CPPI
7
2013 Sales by Total Price Paid: $10M+
7% 7%
13%
18%
56%
Count Volume
28%
20% 20%
14%
19% > $200M 100 to 200M 50 to 100M 25 to 50M 10 to 25M
33 35
55
83
261
Source: Real Capital Analytics (RCA) 8
Sales By Price Per Room: $10M+
Source: HVS and Real Capital Analytics (RCA)
120 122
163 207
45 61 38
46 11
20 3
11
0 50
100 150 200 250 300 350 400 450 500
2012 2013
# of
Pro
pert
ies
$750k+ $500-750k $300-500k $200-300k $100-200k <$100k
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Park Lane Hotel Manhattan (605 rooms) Buyer: The Witkoff Group/Jynwel Capital Seller: Helmsley Charitable Trust Interest: Fee Simple Price: $660,000,000 Price/Room: $1,090,909
Three Sales > $1 Million Per Key
Langham Place Fifth Avenue Manhattan (214 rooms) Buyer: Pacific Eagle Holdings Seller: Bizzi & Partners Dev. Interest: Fee Simple, Leased Fee Price: $229,000,000 Price/Room: $1,070,093
Calistoga Ranch Napa Valley, California (50 rooms) Buyer: Auberge Partners Calistoga Seller: Olympus Real Estate Partners, LLC Interest: Leasehold Price: $55,000,000 Price/Room: $1,100,000
10
Three Sales > $500M Purchase Price
Grand Wailea Resort & Spa Maui, HI (780 rooms) Price: $774,000,000 Price/Room: $992,308
Hyatt Regency Orlando Convention Center Orlando, FL (1,641 rooms) Price: $717,000,000 Price/Room: $436,929
Park Lane Hotel Manhattan (605 rooms) Price: $660,000,000 Price/Room: $1,090,909
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Omni Enters Resort Market in Big Way
Rancho Las Palmas Palm Springs, CA (444 rooms) Price: $103,011,710 Price/Room: $232,008
Homestead Resort Hot Springs, VA (483 rooms) Price: $102,593,396 Price/Room: $212,409
Grove Park Inn Resort & Spa Asheville, NC (512 rooms) Price: $128,594,739 Price/Room: $251,162
La Costa Resort & Spa San Diego, CA (532 rooms) Price: $365,800,000 Price/Room: $598,691
12
GIC Singapore Enters Resort Market
Grand Wailea Resort & Spa Maui, HI (780 rooms) Price: $774,000,000 Price/Room: $992,308
Biltmore Resort & Spa Phoenix, AZ (740 rooms) Price: $321,394,785 Price/Room: $434,317
La Quinta Resort & Spa Palm Springs, CA (796 rooms) Price: $281,770,770 Price/Room: $353,983
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Top 10 Active Markets by $ Volume
Source: Real Capital Analytics (RCA)
Market $ Volume (Millions) $/Room # Properties
NYC Metro $2,528.4 $336,765 25
Hawaii $1,803.5 351,354 12
San Francisco Metro $1,326.8 280,268 32
Miami Metro $1,125.1 195,223 51
Orlando $996.3 129,693 31
Los Angeles $955.5 129,347 41
Houston $782.0 117,880 44
San Diego $765.0 265,340 22
Chicago (tie) $620.6 114,035 30
Atlanta (tie) $620.6 83,244 40
Boston $597.2 198,404 13
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Top 10 Active Markets by Properties Sold
Source: Real Capital Analytics (RCA)
Market $ Volume (Millions) $/Room # Properties
Dallas / Fort Worth $545.0 67,198 59
Miami Metro $1,125.1 195,223 51
Houston $782.0 117,880 44
LA $955.5 129,347 41
Atlanta $620.6 83,244 40
SF Metro $1,326.8 280,268 32
Orlando $996.3 129,693 31
Chicago $620.6 114,035 30
Phoenix $514.8 115,374 26
NYC Metro $2,528.4 336,765 25
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Hotel Buyer Composition
Source: Real Capital Analytics (RCA)
Q3
16
Top 25 Buyers/Sellers by $ Volume
Source: Real Capital Analytics (RCA) 17
Hotel Lender Composition – Past 5 Years
Source: Real Capital Analytics (RCA) 18
Comparative CRE Cap Rates - PWC
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
Regional Mall
CBD Office
Suburban Office
Apartment
Full-Service Lodging
Limited-Service Lodging Luxury Lodging
Select Service Lodging
Source: PriceWaterhouseCoopers Real Estate Investor Survey 19
Hotel Cap Rates Steady
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
Full-Service Lodging
Limited-Service Lodging Luxury Lodging
Select Service Lodging
Source: PriceWaterhouseCoopers Real Estate Investor Survey 20
Hotel Cap Rates Steady
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
Full-Service Lodging
Limited-Service Lodging Luxury Lodging
Select Service Lodging
Source: PriceWaterhouseCoopers Real Estate Investor Survey 21
Derived Cap Rates Steady
6.1
7.7
9.5
5.8
7.4
9.3
6.2 7.4
9.2
0 1 2 3 4 5 6 7 8 9
10
Full Service SS & ES Ltd. Service
Full Service 2012 Ltd. Service
Source: Derived from hotel s appraised by HVS at time of sale
2011 2012 2013
22
Comparative Rates of Return - 2013
6.2 7.3
10.6
17.4
7.4 8.5
11.1
18.2
9.2 10.3
12.7
20.1
0.0
2.5
5.0
7.5
10.0
12.5
15.0
17.5
20.0
22.5
Historical NOI 1st Year NOI Discount Rate Equity IRR
Full Service
SS & ES
Ltd. Service
Source: Derived from hotel s appraised by HVS at time of sale 23
Cap Ex Impacts Cap Rates and Values
Source: ISHC CapEx 2000 and STR
0
40,000
80,000
120,000
160,000
200,000
0% 2% 4% 6% 8%
10% 12% 14% 16% 18%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Years
Range # of Rooms
24
Cap Ex Impacts Cap Rates and
Source: ISHC CapEx 2000 and STR
0
40,000
80,000
120,000
160,000
200,000
0% 2% 4% 6% 8%
10% 12% 14% 16% 18%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Years
Range # of Rooms +5 Years
25
Cap Ex Impacts Cap Rates and Values
Source: ISHC CapEx 2000 and STR
0
40,000
80,000
120,000
160,000
200,000
0% 2% 4% 6% 8%
10% 12% 14% 16% 18%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Years
Range # of Rooms +10 Years
26
OUTLOOK FOR 2014 • Ideal conditions for another strong transaction year – activity
expected to equal or exceed that of 2013
• Debt ceiling fight in spring unlikely to derail markets, but a risk • Wide array of buyers will continue to pursue hotel investments • More sellers will come to the table as sales prices near peak pricing • Availability of debt will continue, with lender competition putting
pressure on interest rates and loan-to-value ratios • Interest rates expected to rise only moderately – no major concern • Capitalization rates expected to remain steady despite rise in NOI due
to availability of capital and buyer competition for quality assets 27
Suzanne R. Mellen, MAI, CRE, FRICS, ISHC
Suzanne R. Mellen is the Senior Managing Director of HVS Consulting & Valuation and HVS Gaming Services, and is responsible for operation of the firm’s San Francisco, Los Angeles and Las Vegas offices. HVS is a full-service consulting and valuation firm specializing in hotel, gaming, and hospitality properties worldwide. HVS offices under her leadership are renowned for excellence and integrity. Ms. Mellen has appraised thousands of hotels, gaming assets, and related real estate over the past 36 years. She has authored numerous articles and is a frequent lecturer and expert witness on the valuation of hotels, casinos, and related issues.
Ms. Mellen has a B.S. degree in Hotel Administration from Cornell University and holds the following designations: MAI (Appraisal Institute), CRE (Counselor of Real Estate), FRICS (Fellow of the Royal Institution of Chartered Surveyors), and ISHC (International Society of Hospitality Consultants). Suzanne Mellen’s professional experience includes consulting and appraisal positions with HVS New York, Morgan Guaranty Trust, Laventhol & Horwath, and Helmsley-Spear Hospitality Services, Inc. in New York City and Harley-Little Associates in Toronto, Canada.
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