Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Tuesday, 12 June 2018

Strong Economy, Prudent Lending Prolong Hotel Cycle

Reports of the hotel sector's demise appear to be unfounded, thanks to a strong economy, recent tax cuts and a scaling back of development.

Commercial Real Estate Direct Staff Report

The hotel sector is hanging on in a prolonged market cycle. Reports of its death have been greatly exaggerated.

Talk of gloom and doom has persisted amid fears of overbuilding, but the reality is much sunnier, said Peter Nichols, vice president and national director of Marcus & Millichap's national hospitality group. The company's 2018 Hospitality Investment Forecast points to positive factors, including a strong economy and recently enacted tax cuts.

"We're still in a growth period, so it's an opportune time to buy in, or recycle capital," Nichols said. The window could be limited, though, as interest rates are on the way up. But increasing interest rates are usually a sign of economic growth, which typically is good news for hotels.

"Lodging fundamentals continue to grow," added Geraldine Guichardo, vice president, Americas Hotels Research for JLL. That's "primarily attributable to a strong economy. Recent indicators suggest the economic expansion is only accelerating and the economic effects of the recently passed tax legislation have yet to be felt."

            Hotel Rooms Under Construction


Source: STR Inc.

On the ground, operators also have a sunny outlook. Christopher Nassetta, president and chief executive of Hilton Worldwide Inc., noted that corporate hotel customers are more confident and that was resulting in them "sort of loosening up on the purse strings." Speaking on a recent earnings call, he noted that the current cycle is longer than the norm, which...


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Data Digest







Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44




cppichart FP



CMBS 2.0 Spreads


Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41





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