Recent input from industry experts confirms the Americas outlook suggested in the biannual Burba Hotel Network Hotel Investment Survey completed in January remains the same, which means the results are a bit mixed. Two of the biggest countries in the region (the United States and Brazil) seem to be headed in opposite directions with everyone else somewhere in-between.
One of the questions posed in the survey asked how confident respondents were that the volume of investment activity in 2015 would be greater than it was in 2014. An overwhelming majority (90%) of survey respondents in January were very confident or somewhat confident that there would be more U.S. investment opportunities in 2015 compared to the previous year. Nearly half of those who were confident were very confident.
“The confidence level for increased U.S. hotel investment in 2015 results from healthy industry fundamentals, available financing and a greater willingness to transact at this point in the cycle,” said Doug Kessler, president, Ashford Prime and Ashford Hospitality Trust, Dallas. “Hotels offer strong relative returns today compared to other real estate classes while simultaneously serving as a potential future inflation hedge.”
The survey outlook for Canada, the Caribbean and Mexico was a bit less optimistic but still positive. “The hotel market in the Americas is rapidly growing, and we anticipate there will be significant investment opportunities in the region in 2015 based on last year’s strong tourism figures,” said Alejandro Zozaya, chief executive officer, Apple Leisure Group.
Survey respondents were the least confident about the growth in investment opportunities in Brazil. The host country of the recent World Cup and the upcoming Olympics is showing signs of caution and uncertainty. Approximately 37% of survey respondents were not confident that the volume of hotel investment opportunities in Brazil will be greater in 2015 than they were in 2014 — the most negative result in all the Americas.
“Although January results for the 83 hotels managed by Atlantica met our expectations, from a future investment perspective, we are taking a more cautious approach,” said Paul Sistare, president and CEO, Atlantica Hotels International, São Paulo. “With the economy contracting far more than expected, inflation rising 1.2% only in the month of January, an impending water-shortage crisis in the southeastern states of Brazil, the widening corruption scandal threatening to ensnare top politicians, and a country deeply divided among political lines with the incumbent president with the lowest approval ratings of her term, perhaps it is the moment to take a deep breath and watch how this all unfolds. In my 20 years of living and investing in Brazil, the country has survived many crises — however, none so serious and never so many at once. But it has survived, and that is the key takeaway.”
Contributed by Burba Hotel Network
Editor’s note: For the full version of this article, please see the June issue of HOTELS’ Investment Outlook.