U.S. Hotel Development Cost Survey 2020
U.S. Hotel Development Cost Survey 2020 — By Luigi Major

HVS · 15 Oct

In 2019, the national lodging market reached new heights, with hotels reporting the highest occupancy and ADR levels ever recorded. Similarly, hotel development continued at a steady pace, with new hotels opening to a burgeoning market and new and exciting projects continuously being moved through the development pipeline. Since the start of the COVID-19 pandemic, government restrictions, travel and group cancellations, and an overall fear of traveling have caused an unprecedented drop in travel and tourism demand in the country and around the world, which has resulted in substantially lower occupancies and average rates.

HVS Musings: Mixed-Use Development - The Most Sustainable Model For Hotels Going Forward
HVS Musings: Mixed-Use Development - The Most Sustainable Model For Hotels Going Forward — By Mandeep S Lamba, Dipti Mohan, Akash Datta

HVS · 14 Oct

Mixed-use development, usually a planned combination of hotels, retail, office or residential space, is a fairly widespread concept globally with several such iconic projects around the world. In the last decade or so, the concept has been gaining ground in India as well, though the combination (two or more elements) of retail, office, and residential spaces have been more popular. However, as investors look to maximize returns through efficient land usage and optimal utilization of FSI, hotels have also been added to the mix.

HVS Musings: DCF is the most appropriate method of hotel valuations, especially during the COVID era
HVS Musings: DCF is the most appropriate method of hotel valuations, especially during the COVID era — By Dipti Mohan, Akash Datta

HVS · 6 Oct

In a market like India, where land most often than not is mis-appropriately valued resulting in exaggerated project costs and hotel transactions are limited in number, the only viable methodology that remains relevant especially in the current uncertain & volatile market scenario is that of Discounted Cash Flows (DCF). Moreover, the current pandemic has had an unprecedented impact on the hospitality sector, with hotels being temporarily closed and the sector witnessing all-time low performance metrics, by the virtue of which, assessing the value of a hotel on current income fails miserably.

Evolution of Hotel Management Agreements and Rise of Alternative Agreements
Evolution of Hotel Management Agreements and Rise of Alternative Agreements — By Hala Matar Choufany, Ersin Yildirim

HVS · 30 Sep

Hotels are complicated investments and therefore selecting an appropriate hotel agreement for a property requires exhaustive research and investigation by an investor. The choice of an operator as well as the hotel operating agreement has a significant impact on the cashflow and the potential value of the property. Hotels and the hospitality market are constantly evolving as a result of brands consolidating, owner profiles changing, technology disruption, changing traveler behavior as well as hotel investment trends altering.

Property Taxes Post COVID-19
Property Taxes Post COVID-19 — By Suzanne R. Mellen, Brian F. Bisema

HVS · 29 Sep

After realizing record-high RevPAR levels with over 100 consecutive months of growth, the lodging industry continued to strengthen through 2019, albeit at a significantly more tempered rate. Then, in the first quarter of 2020, COVID-19 struck. The unimaginable pandemic erased years of RevPAR gains virtually overnight, leaving owners and operators scrambling to strategize the forthcoming steps. While logistics pertaining to reopening hotels, new sanitation standards, and controlling variable operational expenses are on the forefront of hoteliers' minds, fixed expenses, particularly an asset's property tax burden, are also key factors that hotel owners should keep on the horizon.

HVS Monday Musings: Hotel Owners Should Think Like Institutional Owners in the Post-COVID Era
HVS Monday Musings: Hotel Owners Should Think Like Institutional Owners in the Post-COVID Era — By Dipti Mohan, Akash Datta

HVS · 14 Sep

As we all gradually get back to business one of the pertinent questions that is being asked is whether hotels can still be considered a good investment vehicle going forward. We believe the answer to be a big 'yes'. It's true that the demand will be subdued for the near to medium term, but the industry is expected to regain its 2019 glory in the next 2-3 years, and this is perhaps an opportune time to invest in hotels. However, hotel owners need to re-evaluate their investment objectives and don the hat of an institutional investor now more than ever.

HVS Monday Musings: Improving Hotel ROI – Thinking Out of Box from Design to Operations
HVS Monday Musings: Improving Hotel ROI – Thinking Out of Box from Design to Operations — By Ajay Mehtani

HVS · 31 Aug

As an industry there is a need to make hotels more viable. The pandemic has taught us to rethink in this direction and develop hotel assets that can drive higher ROI. It can only be done when we look at making changes from Design to Operations. Ideally, we should make changes to the industry status, compliance cost and interest cost, however, as these are policy matters, we cannot do much ourselves.

HVS Monday Musings: Why Professional Asset Management Adds Value to Hotel Investors?
HVS Monday Musings: Why Professional Asset Management Adds Value to Hotel Investors? — By Dipti Mohan, Ajay Mehtani

HVS · 24 Aug

The role of a professional Asset Manager has traditionally been underplayed in India, even though the expertise brought in by a quality Asset Manager can yield great results for Investors. This is already a proven fact in several mature markets where Hotel Investors extensively use their services. The role of the Asset Manager has become even more crucial in the current times of uncharted waters.How do professional Asset Managers add value to Hotel Investors? Asset Managers work with owners to maximize the asset value and potential by optimizing operational efficiencies to deliver better ROI.

HVS Asia-Pacific Hotel Law Guide
HVS Asia-Pacific Hotel Law Guide — By Daniel J. Voellm, Eunice Wong

HVS · 3 Aug

The Hotel Law Guide helps serve hotel real estate owners, developers and operators as a reference for experienced and well-known lawyers and attorneys with a track record in Asia Pacific region. Each law firm highlights their representative attorneys with the type of services offered and notable projects.

Hotel Operators Must Be Flexible, Be Lean and React Quickly to Change, says HVS Webinar Panellists
Hotel Operators Must Be Flexible, Be Lean and React Quickly to Change, says HVS Webinar Panellists — By Russell Kett

HVS · 10 Jul

The issue of financing the cost of reopening the hotel sector was the hot topic tackled in the second hotel webinar organised by global hotel consultancy HVS, legal firm Bird & Bird, EP Hospitality and AlixPartners, which was held yesterday [8th July].

The Case for Targeted Federal Aid to DMOs and Tourism Agencies
The Case for Targeted Federal Aid to DMOs and Tourism Agencies — By Thomas A. A. Hazinski, Joseph Hansel

HVS · 5 Jun

The COVID-19 pandemic has placed at risk the substantial investment of state and local governments in the tourism and hospitality industries. Publicly funded destination marketing organizations ("DMOs"), tourism agencies, and convention centers face budget shortfalls, staffing reductions, and growing financial uncertainty. Targeted federal aid is urgently needed to support DMOs, tourism agencies, and convention centers whose work is critical to the recovery of vital sectors of the US economy.

HVS: Temporarily Closed Hotels Due to COVID-19: When to Reopen?
HVS: Temporarily Closed Hotels Due to COVID-19: When to Reopen? — By Suzanne R. Mellen, Neil J. Flavin

HVS · 12 May

With the advent of the COVID-19 pandemic in the U.S. in early to mid-March 2020, hotel owners and managers watched demand for their rooms suddenly evaporate. Since then, tough decisions have been made regarding whether to remain open or temporarily suspend operations. Hotels that have temporarily suspended operations now need to decide when to reopen. This article addresses the considerations to be weighed in this process and provides one example of the calculus for a hypothetical hotel.

Will Ancillary Revenues become Primary Revenues in the COVID Era?
Will Ancillary Revenues become Primary Revenues in the COVID Era? — By Ajay Mehtani

HVS · 7 May

HVS ANAROCK spoke about ancillary revenues in early 2019 and the concept of focusing on Revenue Per Square Feet at our HOPE conference again in Bengaluru in August last year - thus, initiating a dialogue with the industry on the concepts of Total Revenue Management.When the times are good, Ancillary Revenues seem very small and we let the opportunity pass by, as the effort does not add up to the return!

HVS CPACE Strategy for Avoiding Loan Loss Reserves and Preserving Equity Capital
HVS CPACE Strategy for Avoiding Loan Loss Reserves and Preserving Equity Capital — By Kathy Conroy

HVS · 30 Apr

A recently published article by several of my colleagues at HVS forecasts the expected pattern of decline, and the subsequent recovery, in the market value of hotels in the United States under "best case," "most likely case," and "worst case" scenarios. And while they further acknowledge a variety of factors that will also influence the ultimate value impact realized by a hotel under each of these scenarios, the decline in asset value under the "most likely" scenario is expected to average 26% in 2020, with 2019 market values not being fully recovered until 2023, at which time they are anticipated to surpass 100% of the 2019 market value.

HVS Hotel Transaction Activity: The Factors Influencing a Return to Normalcy in a Post-COVID-19 Time
HVS Hotel Transaction Activity: The Factors Influencing a Return to Normalcy in a Post-COVID-19 Time — By Drew Noecker

HVS · 20 Apr

As a result of the current COVID-19 pandemic, the HVS Team has received many questions about when U.S. hotel transaction volume will return to reasonable, pre-pandemic levels. While we do not have a definite answer, as these circumstances are evolving daily, we have tried to use past events to provide some insight on the factors that would affect a possible rebound. We see the anticipated volume declining because of COVID-19.

HVS COVID-19 Impact on Lodging Tax Revenues
HVS COVID-19 Impact on Lodging Tax Revenues — By Thomas A. A. Hazinski, Joseph Hansel

HVS · 17 Apr

HVS modeled the anticipated RevPAR declines during the COVID-19 pandemic. Based on patterns of recovery following the two most recent recessions, we projected the lodging tax revenues of 24 urban markets in the United States. Comparing these projections to a baseline scenario without the pandemic, HVS estimates combined losses of 24 major U.S. markets could range from $4.0 to $5.5 billion of lodging tax revenues. Lodging tax losses of this magnitude will force bondholders, destination marketing organizations, and other stakeholders to consider steps such as debt refinancing or seeking alternative revenue streams until the hospitality industry recovers from this pandemic.

The Impact of COVID-19 on Hotel Values
The Impact of COVID-19 on Hotel Values — By Suzanne R. Mellen, Anne Lloyd-Jones, Tanya J. Pierson

HVS · 14 Apr

The COVID-19 pandemic and the related restrictions on travel, business activity, and individual movement are having an unprecedented impact on our industry and economy. Hotel owners, operators, lenders, and investors are all facing greater challenges than ever anticipated, as they grapple with plummeting occupancy, average rate (ADR), and RevPAR and seek solutions to mitigate the impact on EBITDA. Owners and operators are dealing with the current crisis day-to-day, making hard decisions regarding staffing, continuing or suspending operations, and having difficult conversations with their management companies, franchisors, lenders, and investors.

HVS Brokerage Insight: Outlook for Transactions in the Wake of COVID-19
HVS Brokerage Insight: Outlook for Transactions in the Wake of COVID-19 — By Dustin Robinett, Kelson Reimer

HVS · 21 Mar

As of February 2020, the market remained strong, with low-interest rates continuing to attract investors despite some softening in the outlook for the industry. It's a whole different world just a few weeks later. The coronavirus (COVID-19) has directly impacted the hotel industry through the expeditious cancellations or postponements of large events and business travel across the country.

The Importance of Financial Relief for the Hotel Industry
The Importance of Financial Relief for the Hotel Industry — By Anne Lloyd-Jones

HVS · 20 Mar

The coronavirus (COVID-19) pandemic is having a profound impact on the hospitality industry, as travel restrictions, limits on large gatherings, the closure of restaurants and bars and, perhaps most influential, fear of the virus, have brought travel—and most other aspects of hospitality—to a virtual halt. According to Chip Rogers, president and CEO of the American Hotel and Lodging Association (AHLA), "The impact to our industry is already more severe than anything we've seen before, including September 11th and the Great Recession of 2008 combined."

Asset Management – Why Bother?
Asset Management – Why Bother? — By Russell Kett

HVS · 10 Mar

In the course of each year my colleagues and I see a huge number of hotel P&Ls and, within them, there are often wide variances in performance, even in like-for-like situations - whether it is better or worse revenue generation, cost control or effectiveness. Some hotel management companies don't produce an adequate return on their owners' investment by doing as much as they possibly can to increase revenues, reduce operating costs and improve bottom-line profits and cash flow. Only when given a 'kick' from the owner or from a third-party asset manager acting on behalf of the owner does the optimisation of a hotel's performance - and therefore its value - often become a reality.

Keeping Mobile Tech in Hotels Secure with Biometrics
Keeping Mobile Tech in Hotels Secure with Biometrics — By Court Williams

HVS · 8 Jan

A big question currently facing the hotel industry is how to keep guests, employees, and data safe in our increasingly connected world. While mobile technology provides a vehicle for much of the progress, it can also provide the security methods needed to safeguard them in the form of mobile-based biometrics.

Key Takeaways from the 2019 Western Canadian Lodging Conference
Key Takeaways from the 2019 Western Canadian Lodging Conference — By Shu Lin (Sharon) Liu

HVS · 13 Dec

HVS was the Platinum Sponsor for the 2019 Western Canadian Lodging Conference (WCLC) that was held in Vancouver on November 25 and 26, 2019. The event welcomed more than 400 delegates, the highest attendance in the history of the conference. The main takeaways from the conference are briefly summarized in this article.

2019 U.S. Hotel Franchise Fee Guide
2019 U.S. Hotel Franchise Fee Guide — By Kasia M. Russell, Bomie Kim

HVS · 26 Nov

The HVS U.S. Hotel Franchise Fee Guide provides a comparative review of various hotel franchises based on their applicable franchise fees. The selection of an appropriate franchise affiliation affects a property's ability to compete in its local market, generate profits, and achieve a distinguished image and market orientation. Because the success of a hotel is based primarily on the cash flow generated, owners and lenders must weigh the benefits of a brand affiliation against the total cost of such a commitment.

Equity Yield Rates on the Decline
Equity Yield Rates on the Decline — By Rodney G. Clough, Katy Black

HVS · 25 Nov

HVS continually tracks the rates of return on the assets on which we consult. In our most recent review, we found that equity yield rates, on average, have shown a continued trend of decline in the full-service and luxury hotels sector, as well as the lower-tier limited-service sector, with the select-service and upscale limited-service sector showing stability.Equity yield rates were notably lower for full-service and luxury hotels, averaging 16.4% for the year-to-date 2019 period, which is 140 basis points (bps) below the 17.8% most recent peak level recorded in 2017.

The Current Impact of Brand PIP Requirements on Hotel Sales
The Current Impact of Brand PIP Requirements on Hotel Sales — By Eric Guerrero

HVS · 22 Nov

The most consistent issue HVS Brokerage & Advisory has encountered during transactions is whether a group is budgeting sufficient capital for prospective asset acquisitions that require PIP renovations. An incorrect estimate means buyer groups must increase their capitalizations or request a price reduction on a dollar-for-dollar basis relative to their cost increases. This ultimately changes many metrics late in acquisition processes and lowers IRRs because any extra capital is drawn entirely from equity and not a blend of equity and debt. Recent observations are detailed below. The lesson is that accurate PIP estimating is vital in successfully acquiring hotels today.

Per Diem Rates: Current & Historical Trends
Per Diem Rates: Current & Historical Trends — By Chelsey Leffet

HVS · 21 Oct

Government per diem rates are set for a number of locations, many applying to multiple regions or localities in each state. A per diem rate is made up of three components: a lodging allowance, meals allowance, and incidental expense allowance[1]; however, this article and the data presented below focus solely on the lodging allowance. The per diem lodging rates, which provide a maximum amount that a federal traveler can reimburse, are based on the costs of mid-priced hotels and are set annually by the U.S. General Services Administration (GSA). The following article examines the per diem trends of the top 24 lodging markets, as defined by STR, which reportedly make up roughly 32%[2] of the total number of hotel rooms across the country. Hawaii is typically included in this list of top lodging markets; however, it has been excluded because the per diem rates are only set for the continental states.