Global Hotel Transactions Hit 7-Year Low in Q1, but Change is Afoot

In the first three months of the year, the worldwide economic crisis dealt its biggest blow yet to the hotel investment industry. As per recently released research by  Jones Lang LaSalle Hotels, global transaction volumes fell from a fourth quarter 2008 figure of $2.1 billion to an even more conservative $1.9 billion, the lowest point since the 9/11-induced downturn during the first quarter of 2002. However, signs indicate that the market may very well have reached a bottom.  Looking at regions around the world, the Americas, which had led the pack in transactions until the credit markets collapsed, continued to lose its footing in the first quarter, recording $556 million in sales compared to $684 million in the previous quarter. The Americas is now second in activity to EMEA, which posted an aggregate $813 million in sales.  Asia Pacific ranked a close third with $531 million.  Big-ticket transactions were scarce, accounting for just 20 percent of all activity; the majority of the deals carried price tags under $35 million. As reported by CPN in January, CNL Lifestyle Properties Inc. acquired Jiminy Peak Mountain Resort in the Berkshires in Massachusetts for $27 million, and the Siegel Group Nevada Inc. wrapped up its $12.6 million purchase of Barcelona Hotel & Casino in Las Vegas. In March, acting on behalf of Fortress Investment Group L.L.C., JLL Hotels orchestrated the sale of the Clarion Hotel Atlanta Airport to private California-based investor Fahim Shah. Given the widespread inaccessibility of credit markets, the usual suspects–high net worth individuals and institutions–were responsible for most of the acquisitions. But times are a changing. According to JLL Hotels, more players are expected to make more deals in the second quarter of this year. “We’re seeing more distress in the market currently; there’s more activity from special services lenders and owners bringing assets to the market,” Thomas Fisher (pictured), a managing director with JLL Hotels, told CPN. “The realization of distress tends to spur activity in the marketplace.” JLL Hotels has facilitated its share of hotel transactions this year and the company expects the pace of its deals–and deals in the marketplace, in general–to increase, slowly but surely, in the immediate future. “We’re seeing more activity in terms of pickup in conversations with clients, which bodes well for increased transactions,” Fisher said. “There will be more activity in the latter half of 2009 and into 2010.”