Americas Hospitality Newsletter (January 16, 2019)

HVS at ALIS 2019 

We are proud to be a patron of the Americas Lodging Investment Summit (ALIS), scheduled for January 28–30 at the JW Marriott & Microsoft Theater. HVS will be represented by Suzanne Mellen, appearing as the moderator for the Boardroom Broadcast: Investing Today, Tomorrow, and Beyond – Episode One, and by Drew Noecker, appearing as the moderator for Money Morning: Private Equity (US$50M & Under) – Rounds One and Two. A team of HVS hospitality experts, including Adam Lair, Kasia Russell, Eric Guerrero, Carrie Russell, Luigi Major, Court Williams, Susan Furbay, Jessica White, and Ben Levin, will also be in attendance and meeting with clients.

Hotel Cap Rates Hold Steady - Values Under Pressure 
By Suzanne Mellen, MAI, CRE, FRICS, ISHC

Following a year of robust transaction activity, hotel capitalization rates remain stable, while hotel NOI and values are under pressure due to slowing RevPAR growth and increasing operating expenses. This article looks at hotel sales and capitalization rate trends, the impact of slowing RevPAR growth on hotel values, and the outlook for 2019.

Many Hotel Sellers Won Big in 2018  
By Rod Clough, MAI

On average, hotel prices increased significantly in 2018, as a strong pool of buyers with favorable outlooks kept downward pressure on cap rates. A strong bidding environment for hotels, particularly those in markets where barriers to entry were high and PIPs had already been completed, kept prices strong, resulting in some big wins for hotel sellers that purchased their hotels at the right time during the last downturn.

Colorado Board of Assessment Appeals (BAA) Confirms Rental Management Program as Intangible Asset 
By Brett Russell

The ruling by the Colorado Board of Assessment Appeals confirms our theory on the valuation of hotels that manage third-party-owned condominiums through their rental management programs. The real property rights of the condominium belong to the condominium owner, and any income generated through management of the units pursuant to a rental management program agreement must be identified as a non-taxable intangible asset.

HVS Chicago Hotel Investment Summit 2019 – Early Bird Rate 
By Stacey Nadolny

The greater Chicago market has experienced a period of economic strength in commercial real estate, evidenced by the number of cranes that line the skyline. The city’s hotel market has been bolstered since the recession with record growth in supply and demand. Stay in the know and join Stacey and her team as they share their ample market intelligence and facilitate conversations with local experts to share market perspectives and expectations at our breakfast event. Sponsorship opportunities available!

Possessory Interests in Hotel Real Estate 
By Erich Baum

A possessory interest is created when a private-sector tenant is granted exclusive use of real property (land and/or building) that is owned by a tax-exempt entity, typically a municipality or a state or federal government agency. Possessory interests result from unique circumstances. Understanding its origin and purpose is necessary when performing a possessory interest appraisal. This article describes possessory interest and provides valuation methodology guidance.

HVS 2018 Canadian Hotel Valuation Index (HVI)  
By Monique Rosszell, and Steve Millar

HVS, the world’s leading hospitality consulting and valuation firm, in collaboration with STR, is pleased to deliver the 2018 Hotel Valuation Index (HVI). For Canada, the HVI offers critical information on 19 Canadian hotel markets and the country itself, including hotel value changes and projections through 2021 and intelligence on market dynamics for primary and secondary hotel markets.

HVS Market Pulse: Greater Fort Myers, FL 
By Bradley Hoban

Post-recession, the lodging industry in the greater Fort Myers market has experienced strong RevPAR growth, primarily attributed to increases in occupancy. Despite a significant increase of new supply in 2008 and 2009, when eleven hotels representing 1,397 additional room nights were added to the inventory, market-wide occupancy levels have increased since 2010. More recently, the market’s performance has been tied more to weather and environmental factors.

HVS Market Pulse: Bend, Oregon 
By Breanna Smith, MAI and Kirsten Smiley, MAI

Bend is located approximately 100 miles southeast of Portland, Oregon, situated along the Deschutes River. In 2017, the United States Census Bureau reported that the Bend-Redmond Metropolitan Statistical Area (MSA) was among the fifteen fastest-growing metro areas in the nation. In addition to tourism, the local economy is largely supported by the healthcare sector, manufacturing industry, outdoor apparel industry, bioscience sector, software and high-tech sector, and craft-brewing industry.

Brokerage & Advisory Investment Opportunity – Days Inn & Suites by Wyndham Houston NW - Cypress 
By Eric Guerrero and Drew Noecker

HVS, as sole and exclusive advisory firm to Ownership, is pleased to present the opportunity to acquire The 62-key Days Inn & Suites Houston NW-Cypress, a limited-service hotel located in the Houston Northwest submarket. This offering presents an excellent opportunity to acquire a stabilized Days Inn below replacement cost. The Property has a 600-square foot onsite living quarters with a kitchen and separate living/sleeping areas, making this an ideal investment opportunity for an owner/operator. The 62-key configuration includes the living quarters, so if the apartment is occupied, there will be 61 rentable keys at the Property. The interior corridor Property opened in February 2017 and is in excellent physical condition. An insignificant change-of-ownership PIP is expected and based on current pricing guidance. There are approximately 13 years remaining on the current franchise agreement.

Brokerage & Advisory Investment Opportunity – La Quinta Inn & Suites Houston NW-Beltway 8-West Road 
By Eric Guerrero and Drew Noecker

HVS, as sole and exclusive advisory firm to Ownership, is pleased to present the opportunity to acquire the 72-room La Quinta Inn & Suites Houston Northwest Beltway 8/West Road, a limited-service hotel located in the rebounding Houston Northwest submarket. Built in 2013, the Property is in excellent physical condition; thus, a minimal change-of-ownership PIP is expected. There are approximately 15 years remaining on the franchise license term. The Property is being offered free-and-clear of any management encumbrances, providing an investor with the flexibility to restructure the Hotel’s operations, yield-management strategies, and cost-containment initiatives to maximize top-line revenues and bottom-line cash flows.

Brokerage & Advisory Investment Opportunity – TownePlace Suites by Marriott Dallas-McKinney 
By Eric Guerrero and Drew Noecker

HVS, as sole and exclusive advisory firm to Ownership, is pleased to present the opportunity to acquire the 88-key TownePlace Suites by Marriott Dallas-McKinney, an extended-stay hotel located in the booming North Dallas submarket of McKinney, Texas. The hotel is currently under-performing versus its competitive set because the ownership group has been focused on other development projects. This opportunity would present a more “hands-on” operator the ability to strategically penetrate the competitive set aggressively and operate above current EBITDA margins. Property tour dates have been released for 10/8 and 10/9, please reach out to us to schedule a visit.

HVS Upcoming Conferences | Mexico Hotel and Tourism Investment Conference (MexHIC) February 20, 2019 

Like emerging hospitality markets over the world, Mexico and Central offer complex but rewarding opportunities for hotel and resort development. MexHIC is a forum for interaction between market participants focused on defining market drivers and visualizing a path for sound industry growth. MexHIC also gives stakeholders a chance to hear from industry leaders and representatives of major hotel brands; network with developers, investors, lenders, and government officials; as well as engage the many challenges and opportunities of the Mexican and Central American lodging landscape.

HVS is Hiring in North America! 

We are looking for Analysts to join our Consulting & Valuation or Asset Management (remote work) divisions. We prefer to hire individuals with at least two years of full-time work history and who can demonstrate flexibility, focus, and self-motivation. Our culture puts our personal health and rest before work in the priority scale, encouraging team members to take care of themselves, while succeeding within our team (we prefer “family”).

HVS in the News 


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