Hotel prices will be increasingly volatile as bidders take markedly different views of the sector’s prospects.
The prediction about variable buying decisions was made by Nick Marsh, executive director of Jones Lang LaSalle Hotels.
Speaking at this week’s annual European hotel industry investment conference, at London’s Royal Lancaster Hotel, he said: “Prior to 11 September, we had noticed increasing consistency in pricing among buyers, with bids often coming within 5% of each other. However, since then, we have seen this widen very significantly and expect it to continue.”
He also said there would be a sharp reduction in the level of mergers and acquisitions activity, which dominated the sector in the first part of the year.
“We expect to see limited M&A activity as lower stock prices make it more difficult to use ‘paper’ for takeovers. We think hotel companies are more likely to use their cash to make strategic single-asset purchases.”
He also expected to see more income coming to the market from US-managed opportunity funds and German open- and closed-end funds.
