Insights into Hospitality Market Activity and Interest Rates…
In the following article, Bill Sipple, Executive Managing Director of HVS Capital, discusses activity in the different hotel markets and how interest rates could effect transaction activity. Some key takeaways from the conversation include…
– How lower end limited service properties are the only product segment that hasn’t seen a tremendous amount of growth.
– That we are starting to see more interest in tertiary markets because of the competition in the primary and secondary markets.
– That interest rates will rise but that no one is predicting a large increase, which would probably mean only nominal impacts on transaction activity.
-A rising interest in “income efficient properties”, which are the higher-end select service brand, a segment of the market where there’s been a lot of interest and a lot less operational risk. Lower end properties have a very small scale of investment making these properties a friends and family kind of an equity play, as opposed to an institutional equity play. So, in that case it’s harder to find interest, it’s harder to gain scale. The only way you can actually gain scale is through a portfolio acquisition.