Green buildings have increased approximately 10.9% in 2011, with return on investments of approximately 9.9%.
Uncover our predictions for acquisitions, refurbished properties and green thinking in 2012.
Acquisitions core and center
The US hotel transaction market showed signs of recovery in 2011 as transaction volume increased in each of the first three quarters.
Given analysts’ expectations of a slow, gradual economic recovery, risk-averse investors are anticipated to continue focusing on core assets in key gateway markets in the near term.
Demand for lower-quality assets located in secondary and tertiary markets, on the other hand, is anticipated to remain challenged, particularly given the pullback in the CMBS markets, a vital source of financing for these assets.
The overall conclusion is that the hotel market remains highly cyclical, with both performance and transaction levels linked closely to the wider economic environment.
Refurbish, reposition or redirect?
Development activity has slowed and all but ceased in some parts of the world, with the focus turning to rebranding and refurbishing (including redevelopment, repositioning and reflagging).
This has allowed hotel owners and operators to continue expanding their brands and portfolios at a lower cost relative to new development and remain competitive by responding to the interests of today’s traveler4 .
However, the trend toward the establishment of brand presence through development of new hotels continues to permeate emerging markets, such as those in Latin America and Asia.
While hotel companies focus their market penetration and brand expansion efforts on development in emerging markets, market penetration led by rebranding initiatives of acquisitions and existing portfolios are expected to remain commonplace in more established markets in 2012 and into 2013.
Green: the new normal
Building owners anticipate that valuations of newly built, green buildings have increased approximately 10.9% in 2011, with return on investments of approximately 9.9%5 .
A number of green certifications exist globally, including:
- Leadership in Energy and Environmental Design (LEED)
- Green Globe
- Green Key
- Energy Star
- Green Seal
- Sustainable Tourism Eco-certification Program (STEP)
Irrespective of certifications, hotel owners and operators are identifying opportunities to go green through such measures as energy and water efficiency, waste reduction and management, sustainable and local purchasing and the use of alternative transportation.
Companies are allocating resources to green measures, while communicating the impact on the bottom line to stakeholders, guests and employees.
4 Waddell, Michael, “Hoteliers Seek New Identities, Better Branding,” Memphis Daily News, Vol. 126, No. 195. 6 October 2011.
5 Green Outlook 2011: Green Trends Driving Growth, McGraw-Hill Construction, 2010.
<< Previous | Next >>
