Briefing: Deal-making in today’s hotel market

Hotels are a strong commercial property asset class but there are many global factors at play changing the hospitality landscape. According to JLL, the first six months of 2016 saw Asia become the largest source of outbound capital flowing into global hotel real estate. The report also found that global hotel deal activity in the first half of 2016 declined 52% year-on-year to US$24 billion.

In these videos four experts discuss investment in hotels:

There are many great technological changes happening in the industry all the time, but as discussed in the above videos, investment decisions largely come down to profit and reliability.

This year there has been uncertainty in all markets causing a slowdown in deals. A report from JLL shows that overall Real Estate transactions in the first half of 2016 is 10% lower than the first half of 2015.

JLL also found that New York is the most liquid city in the world, with hotel transactions reaching US$2.3 billion as of June 2016. While in Asia Pacific, Japan is top with US$2.2 billion worth of transactions in H1 2016, and accounts for over half of regional transaction volumes. In China there has been an increased level of investment activity, up 118% to US$244.2 million.

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Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: Are alternatives now mainstream?

Osprey Equity Partners recently agreed to fund an £80m development of a GoNative aparthotel in East London. They are backed by LJ Partnership.

Alternative accommodation types like aparthotels and hostels are becoming increasingly attractive to investors. More in-depth data from historic transactions and long established properties in the sector, have given investors greater insight on which to base their decisions. This is slowly bringing more products into the mainstream, as our industry experts discuss in these videos:

A report by WATG released last year showed that one attractive element of aparthotels is the cost effectiveness to build. It states that on a site with an £17.5m acquisition cost, a 4 star hotel would take £28.2m to construct and a 4 star aparthotel only £27.2m. It also states that terminal value on the aparthotel would be £93.1m and only £82.3m on the hotel, where both have an exit yield of 5%.

Another difference between hotels and aparthotels highlighted by WATG is that, in an aparthotel, rooms division accounts for some 93% of revenues, whereas hotels take a large portion of revenue from F&B and other areas.

Finally, WATG’s report showed GOP margins of 63% and 49% for the respective aparthotel and hotel.

When completed the GoNative aparthotel will be a 21 storey property. GoNative will manage the property under a hotel management agreement.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do see here. It’s free.

Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

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