Hospitality Group

What's in Store for Primary and Secondary Hotel Markets in 2013

Andy Broad of Hotel AG One question that we always ask at the beginning of a new year to better serve our clients is "what do we expect from the hospitality market in 2013?" Since primary market hotel sales shaped 2012, we wanted to look further to see what buyers and sellers can expect from primary markets in 2013. To give some personal insight into this question, we asked Hotel AG VP and Partner Andy Broad. Andy works out of New Jersey and has a lot of experience selling in primary markets such as Washington D.C., New York City, and Los Angeles. Andy shared, "I would expect 6-8% RevPAR growth out of the top 50 MSAs on average in 2013.  I strongly believe that this growth will likely come mostly from ADR growth." You might ask, "Is there any relevance in trying to sell in secondary markets?" To this question Andy answered, "I think there is actually more opportunity in secondary and tertiary markets." Andy continued, "Some of these markets have shown very strong RevPAR growth in the last 12-24 months.  For example, parts of Texas, North Dakota and Pennsylvania have seen extraordinary growth because of natural gas activities.  However, one challenge in these secondary and tertiary markets is the lack of barriers to entry so there is a price per key ceiling in these markets." To further investigate the future for secondary markets, we asked Andy "Will there be buyers for the secondary markets? If so, what type of assets?" Andy replied, "In general, I believe there is a lot of capital looking for hotel investments in all markets. Regardless of whether or not the asset is a strong current yield play or turnaround play, I think most buyers are looking to invest in or reposition to certain brand families such as Hilton, Marriott, Starwood and IHG." Have your own questions about the 2013 hospitality market? Contact Andy Broad by phone at (917) 553-4267 or by email at ACBroad@HotelAssetsGroup.com.

published: 01-07-2013

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