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Hotel Investor Sentiment SurveyIssue 25, December 2012

Jones Lang LaSalle Hotels know how

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‘Buy’ signals increase to highest level since 2005, suggesting more transactional activity ahead Investors’ short-term performance expectations improve but at expense of medium-term outlook as global hotel markets adapt to continuing economic uncertainty; sentiment is divergent by region.

•Americas – Short-term investor sentiment reaches its highest level since mid-2007 as both lodging fundamentals and deal velocity maintain strong momentum.

•EMEA – Despite economic challenges in the Eurozone, performance expectations remain in positive territory.

•Asia Pacific – Short-term sentiment dips to three-year low weighed down by outlook for China and India; South East Asian markets emerging as bright-spots.

AuthorsDavid Green-Morgan Global Capital Markets Research Director Tel: +65 6220 3888

Karen Wales ExecutiveVicePresidentResearch,AsiaPacific Tel: +61 2 9220 8779

Lauro Ferroni Vice President Research, Americas Tel: +1 312 228 2566

Josef Filser Research Associate, EMEA Tel: +44 20 7399 5070

JonesLangLaSalleHotelsisaglobalrealestateservicesfirmfocusedexclusivelyonhotels&hospitality.Weprovideacquisitionandfinancingadvice, valuations, investment sales and asset management for luxury hotels, select service and budget hotels, smaller hotelsand pubs, from single assets to large portfolios and mixed-use developments.

Inthelastfiveyearswecompletednearly4,000advisoryandvaluationassignmentsandmoresale,purchaseandfinancingtransactionsthananyotherhotelsrealestatefirmintheworld…worthover$30billion.With44officesin20countriesand265hotelsrealestateexperts,nootherfirmisbetterconnected.Throughourdepthandbreadthofresearchandexperience,with75ResearchReportseachyear,weknowthemarketat every level, we know the players and we know how to get results.

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Global overview................................................................................. 1 Investors’ expectations stabilise as 2013 approaches .................... 1 More stability around cap rates and IRRs ....................................... 2 Buy intentions see another move upwards ...................................... 3Americas overview ........................................................................... 4 Steady growth in performance underpins more positive outlook .... 4 Yieldrequirementsapproachpre-downturnlevels .......................... 6 ‘Buy’ sentiment dominates; intentions to sell increase .................... 7EMEA overview ............................................................................... 10 Trading performance expectations remain positive but weaken in southern Europe ........................................................................ 10 IRR expectations hardening due to lower LTV and costlier debt ......11 Strong ‘buy’ sentiment for upscale and luxury assets ....................13Asia Pacific overview ..................................................................... 15 Positive trading sentiment softens as global growth slows ............15 Investors demand higher returns as income growth moderates ....... 16 InvestmentcapitalincreasinglytargetingtheAsiaPacificregion .... 18 MidscalesegmentmostfavouredacrossAsiaPacific ................. 19About the survey ............................................................................. 20Methodology .................................................................................... 21

Table of contents

Hotel Investor Sentiment Survey | December 2012 1

Global overviewHighlights from the survey

• Short-termhoteltradingexpectationsimprovebutattheexpenseof the medium-term outlook as global hotel markets adapt to continuing economic uncertainty.

• TradingsentimentintheAmericashasimprovedconsiderably inthelastsixmonths,whilethemoodinAsiaPacificismore mixed. EMEA remains pessimistic with a more challenging macroeconomic environment.

• CaprateandIRRexpectationshaveincreasedslightly,fromthe very low levels recorded six months ago.

• ‘Buy’signalshaveincreasedsubstantiallywiththoseinvestors looking to hold assets diminishing, indicating a more active transactional market in 2013.

• U.S.citiesseenasbestlocationstobuyglobally,withonlyIstanbul matching their appeal.

Investors’ expectations stabilise as 2013 approaches

Whilebroadlyconsistent,short-andmedium-termperformanceexpectations have converged slightly in our most recent survey. Medium-term expectations have dropped by 280 basis points while the short-term outlook has improved by 130 basis points, although both indicators are well above their cyclical lows (Figure 1.1). Hotel sentiment is matching what we are seeing across other property sectorswherethemedium-termoutlookismoreuncertain.Whileshort-term solutions are able to boost market sentiment, they arenotnecessarilyfixingthelongertermproblemsfacingthe global economy.

Americas and gateway cities lead the pack

Whilemajorglobalgatewayshaveheldtheirpositionasthemostpopular segment geographically, in this edition of the survey they have been joined by the Americas region, which has made the biggest gains since our April 2012 survey (Figure 1.2). The Americas regionhasnowpassedAsiaPacificasthemosthighly-ratedregionfor both short- and medium-term trading.

AsiaPacifichasseenthelargestreversals,dropping15.3pointson a short-term basis, and 13.7 points over the medium-term. Asia PacificsentimentisnowonlyfivepointsabovethatofEMEAoverthemedium-term, which is remarkable given the economic outlook facing each region. Short-term expectations for EMEA have barely changed over the last six months, with medium-term expectations becoming slightly more pessimistic.

Thefindingsofourregionalanalysisareborneoutbytherankingsof the global gateway cities for trading. The top three markets on a short term basis are all from the Americas - San Francisco (85%), LosAngeles(76%)andNewYork(65%)withChicagoinfifthplaceat56%.Munichistheonlynon-Americancityinthetopfive.Munichactually tops the list on a medium-term basis (78%) but again it is the American cities that make up the next four places, with New York, San FranciscoandLosAngelesjoinedbyWashington,D.C.Thesefivecities are well ahead of London, which is in sixth place with a positive net balance of 62%.

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Short Term Medium Term

^WeightedbynumberofresponsesSource: Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey

1.1 | Global trading performance expectations 2000 to 2012^

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Net Balance Short Term Medium Term

^WeightedbynumberofresponsesMajor gateways include Barcelona, Chicago, Hong Kong, London, Los Angeles, Milan, Mumbai, Munich, Moscow, New York, Paris, Rio de Janeiro, Rome, San Francisco, Shanghai, Sydney, Tokyo, WashingtonD.C.andVancouverSource: Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey

1.2 | Global trading performance expectations^

2 Hotel Investor Sentiment Survey | December 2012

More stability around cap rates and IRRs

Itisperhapsunsurprisingthatcapraterequirementsgloballyhaveincreased slightly from the last survey when they reached the lowest level on record at 7.5%. Leveraged IRR expectations have also increased, but both measures are showing signs of stability after somesignificantmovementoverthelast12-18months(Figure1.3).

EMEAandAsiaPacificfollowedtheglobaltrendwithcapraterequirementsincreasingby20basispointsinbothregions.TheAmericas region continued its positive trend with a downward movement in cap rates from 7.9% in April 2012 to 7.7% in this survey.

WhileexpectationsforglobalIRRshavemovedupslightlyto16.9%,they are still below the level we recorded 12 months ago (17.8%). RequirementsinEMEAhaveactuallymoveddownby170basispoints over the last six months, while the Americas region has also seen downward movement, but by a much smaller margin of 60 basis points.ThemorepessimisticthemeinAsiaPacificpersistswithIRRrequirementsmovingthemostofallthreeregions,increasingby120basispoints.Despitethesechanges,theIRRrequirementsarestilllowest in EMEA, while the Americas region saw the highest return requirements(Figure1.4).

LondonandParishavethelowestcapraterequirementsglobally,although all have increased slightly from six months ago to move above the 6% mark. Despite the obvious improvement in sentiment in the Americas, only New York and San Francisco are in the top-tenofglobalcitieswithcapraterequirementsunder7%.EmergingmarketsintheMiddleEastandAsiaPacificcontinuetohavecapraterequirementsinthedoubledigitsforinvestorinteresttobeinitiated.

Looking forward, the short-term cap rate trends are diverging across the regions. Investors concentrated on the Americas are increasingly bullishwithasignificantnumberofrespondentsexpectingcapratestotrend lower over the short term. This trend is reversed in EMEA where sentiment remains mixed and cap rates are expected to drift higher. AsiaPacificinvestorsexpectnomaterialchangetocapratesovertheshort term (Figure 1.5).

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Net Balance (Positive/Higher and Negative/Lower) -6% -4% -2% 0% 2% 4% 6%


1.5 | Global cap rate (initial yield) trend over the next six months^

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1.3 | Global investment yield expectations 2000-2012^

Leveraged IRR for New Acquisition (%)

Cap Rate (Initial Yield) for New Acquisition %

Short Term Cap Rate Trend

Americas 18.5% 7.7% LowerEMEA 13.7% 7.2% NeutralAsia Pacific 17.3% 8.1% NeutralGlobal 16.9% 7.6% Neutral^WeightedbynumberofresponsesSource: Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey

1.4 |Investmentyieldrequirements^


‘Buy’ intentions see another move upwards

‘Buy’ signals from the investor community have been given another boost with a three percentage point increase from the previous survey. ‘Buy’ intentions have now increased consistently for the past two years, and this survey’s result is the third highest on record (Figure 1.6). Continuing the theme of previous questions,investorsfromtheAmericasregionincreasedtheir‘buy’intentions, but in contrast to more pessimistic responses to other questionsinvestorsinAsiaPacificincreasedtheir‘buy’signals.

‘Hold’ expectations have deteriorated slightly in this survey, which shouldencouragethoseinvestorslookingtoacquireassets.Infact,‘hold’ expectations are now at their lowest level since the end of 2006.Interestingly,itisintheAmericasandAsiaPacificwhere‘hold’intentions have decreased the most, indicating a potential increase in transactional activity. In EMEA, investors indicated a higher preference to hold assets than in the previous survey.

‘Build’ intentions remained consistent over the last three surveys and havechangedverylittleintheseresultsalso.InvestorsinAsiaPacificcontinue to have a higher weighting towards construction, whereas it isintheU.S.whereappetitefornewhotelsisweakest.

Continuingthethemeofmixedsignals,theinvestorsinAsiaPacificsaw the largest drop in ‘sell’ intentions, although overall their weighting towards selling assets is the lowest of all three regions. Investors in EMEA have also reduced their intentions to sell, while the Americas region saw an increase in those investors looking to dispose of assets.

All of the regions are now demonstrating greater ‘buy’ intentions over and above ‘build’, ‘hold’ and ‘sell’.

As we have seen throughout the global element of the survey, investors are increasingly optimistic on the prospects for hotel investmentintheAmericas,andthisisconfirmedbythemakeupofthe cities in our top-ten league table in Figure 1.7. Nine of the top ten markets are from the Americas, with only Istanbul from EMEA making it onto the list. Emerging and traditional destinations make up the top-ten ‘build’ cities, with Asia and Latin America dominating the list. On the ‘sell’ side, EMEA markets are in the majority, with only Atlanta from the Americas making it into the top-ten.

There has been little change in the preferred asset type of investors in thissurveycomparedtopreviousresults.Upscaleassets,particularlyin the Americas, represent the most preferred segment of the market, (Figure 1.8) gaining slightly on the results from six months ago. Serviced apartments and luxury hotels have slipped marginally compared to the previous survey with budget hotels gaining, especiallyinAsiaPacificwithpreferenceshittingalmost 15% of respondents.

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1.6 | Global short term investment intentions 2000-2012^

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Percentage of Respondents All Grades Luxury Upscale Midscale Budget Serviced Apts


1.8 | Global preferred asset type^

Hot Global Markets

Buy Build Hold Sell1 Vancouver Bali Riyadh Cairo2 Seattle Sao Paulo Budapest Lisbon3 Hawaii Rio de Janeiro Dallas Spanish Resorts4 Boston New Delhi Orlando Birmingham5 Istanbul Mumbai Sao Paulo Jeddah6 Miami Taipei Rio de Janeiro Marrakech7 Los Angeles Manila Casablanca Brussels8 Montreal Seoul Melbourne Atlanta9 San Diego Chendgu Stockholm Riyadh

10 Philadelphia Bangalore Zagreb MilanSource: Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey

1.7 | Top ten global markets – short term investment intentions


Highlights from the survey

• InvestorsentimentacrosstheAmericasmarksimprovement; short-term sentiment posts an 11 percentage point rise over the previous survey, reaching the highest sentiment level since mid-2007.

• Investors’targetedcapratesretreattolevelrecordedinlate2006, declining by 20 basis points to 7.7%, implying asset value appreciation.

• LeveragedIRRrequirementsdecreaseby50basispointsto 18.5% for investments in Americas.

• Investors’‘buy’sentimentagainrepresentsthedominant investment intention, pointing to increasingly active investment market in the months ahead.

Steady growth in performance underpins more positive outlook

Withreasonablyencouragingeconomicnews,andthefactthathoteloperating fundamentals in most major markets across the Americas have exhibited a steady or even increasing rate of growth over the past several months, hotel investors have a resoundingly more positive outlook than they did 12 months ago.

The survey results indicate that the net balance of investors’ performance sentiment for the short term (six months) increased to reach 36.9%, an 11 percentage point increase on the previous survey (Figure 2.1). The net balance represents the percentage of respondents who indicate a positive performance outlook, minus the proportion of respondents who expect negative performance for the given time frames. The improvement in short-term performance expectations is underpinned by a more optimistic economic climate.

For the medium term (two years), respondents’ net balance of positiveperformanceexpectationsincreasedtoreach47.5%,afivepercentage point increase on the previous survey, to reach a level on par with our survey conducted in April 2011. Despite economic risks such as still-high unemployment and on-going stock market volatility inresponsetoEuropeandebtwoesandtheimpending‘fiscalcliff’,among other factors, hotel investors across the Americas are more confidentthaninourprevioussurvey.

Consistent with the previous survey, investor sentiment is highest for major gateway markets. San Francisco, Los Angeles, Boston, Miami and New York exhibit the most positive hotel performance sentimentintheU.S.overthenextsixmonthandtwo-yearperiods,driven by rising corporate and group demand along with high levels of international visitation. Despite the fact that hotel performance in NewYorkhasgrownataslowerpacethantheUnitedStatesaveragethroughthethirdquarterof2012,thediversificationofdemandand the continued extremely high occupancy rates being achieved continue to be a driving factor in investors’ strong medium term sentiment for New York.

Of the markets surveyed in Canada, Toronto and Vancouver marked an increase in both short term and medium term performanceexpectations.Specifically,Vancouver’sshort-termsentiment registered a 19 percentage point increase on the previous survey. Short-term performance expectations for Montreal, on the other hand, softened. Canada is generally expected to prosper due to the nation’s natural resources, its key trading role and business-friendly environment.

Mexico’seconomicoutlookhasbrightenedconsiderably.Whilekeyrisks such as concerns over drug-related violence remain, the country isbenefitingfromstrongdomesticandinternationaldemandinitsurban markets and gradual recovery in visitor volumes across its resorts. The net balance of investors’ performance expectations for Mexico City has remained positive; for Mexico’s resorts, investors also expressed positive performance expectations over the next six months and growth over the medium-term. Of the 27 markets surveyed across the Americas, Mexico resorts exhibited the third-highest improvement in sentiment over the previous survey as visitor arrivals have approached previous peak levels.

Americas overview

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2.1 | Americas trading performance expectations 2000 to 2012^


Forthefirsttimeinfouryears,investorsexpressedpositiveshort-termperformancesentimentfortheCaribbeanduetosignificantgrowthinhotelfinancialfundamentals.Revenueperavailableroomfortheregion’s upper-tier resorts has increased by nearly 11% through the thirdquarterof2012,accordingtoSmithTravelResearch.Medium-term sentiment is positive, indicating that investors generally expect a marked improvement in operating fundamentals at Caribbean resorts over the next two years.

Investors continue to have a positive outlook for hotel investments in São Paulo and Rio de Janeiro, with the short-term outlook exceeding the Americas average performance sentiment as a whole. There is no shortage of international investors and hotel management companies assessing market entrance or expansion strategies in South America’s largest economy.

Buenos Aires exhibited the most negative short-term performance expectationsofallAmericasmarkets.Theresponsesreflectthatthecountry’s economic growth is slowing following two years of high growth,andthereisariskthatelevatedinflationwillhamperbusinessinvestment and consumption.

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San Francisco San Diego

Phoenix Philadelphia

Orlando New York

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Houston Hawaii Denver Dallas

Chicago Boston Atlanta


Source: Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey

2.2 | Americas trading performance expectations


Yield requirements approach pre-downturn levels

Across the Americas, investors’ targeted capitalisation rates (initial yields) have contracted by 20 basis points to reach 7.7% in our current survey (Figure 2.3). Respondents’ expected cap rates are now on par with the level recorded in our November 2006 survey, among the lowest on record.

LeveragedIRRrequirementsdecreasedby50basispointsfromtheprior survey, and now average 18.5%, representing the lowest rate ofreturnrequirementssinceourOctober2007surveyillustrating that risk perceptions are lessening amid the more favourable economic backdrop.

AcrossmarketssurveyedintheU.S.andCanada,thelowestleveragedIRRrequirementswerereportedinhighly-liquidmarketssuch as New York (16.1%), San Francisco (16.7%) and Los Angeles (17.3%).ThehighestIRRexpectationswithintheU.S.werereportedfor Orlando (20.6%), Phoenix (20.1%), Atlanta (20.0%) and Tampa (19.8%). Leveraged IRR expectations averaged 17.9% for the three cities surveyed in Canada, marking a decrease from the last survey of 110 basis points (Figure 2.6).

Correspondingly, New York, San Francisco, Hawaii and Boston maintained the lowest targeted cap rates at 6.4%, 6.5%, 6.9% and 7.0%,respectively,reflectiveofcontinuedinvestorinteresttosecureafoothold in these high entry-barrier markets (Figure 2.5). Hawaii, San Francisco and Miami are among the cities where the greatest share of respondents expects cap rates to decrease further in the next six months (Figure 2.4).

Cap rate expectations were highest for Orlando, Atlanta, Tampa, Phoenix and Dallas. Across the Americas overall, investors’ targeted capratesforacquisitionsoverthenextsixmonthsarenowafull2.7percentage points below their highpoint in 2009.

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Toronto Montreal

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Orlando New York

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AM average^

Net Balance (Positive/Higher and Negative/Lower) ^WeightedbynumberofresponsesSource: Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey

2.4 | Americas cap rate (initial yield) trend over the next six months

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U.S./Canada Leveraged IRR U.S./Canada Cap Rate (Initial Yield) Mexico/Caribbean/South America Leveraged IRR Mexico/Caribbean/South America Cap Rate (Initial Yield)


2.3 | Americas investment yield expectations 2000 to 2012^


YieldrequirementsremainhigherinMexicoandSouthAmericathanintheU.S.andCanadaduetointernationalinvestors’perceptionofhigher risk, the lack of trading activity in these markets and the lower availabilityofdebtfinancing.ForMexicoCitytransactions,investors’targeted cap rate is 1.9 percentage points above the Americas average,whileleveragedIRRrequirementsforassetsinthecityare1.3 percentage points higher than the Americas average.

LeveragedIRRrequirementsarecontractinginBrazilasthecountry’s commercial real estate market continues to become more transparent. Investors indicated a greater tier of risk associated with hotel investments in the Caribbean and Buenos Aires; accordingly, the CaribbeanrecordedthehighestleveragedIRRrequirementofallthemarkets included in the survey.

‘Buy’ sentiment dominates; intentions to sell increase

Some 49.9% of respondents say their primary investment activity over the next six months will be to ‘buy’ assets (Figure 2.7), up 4.5 percentage points over the previous survey illustrating that the transaction market is expected to heat up. The increase in ‘buy’ intentionsaffirmsourviewthatthereissignificantdemandamongprivateequityfunds,realestateinvestmenttrusts,institutionalinvestors and off-shore investors to make hotel investments.

‘Buy’ intentions are highest for primary markets such as Seattle (68.9%), Hawaii (67.6%), Boston (64.1%) and Miami (61.8%), as these cities have witnessed more aggressive growth in revenue per availableroomversustheUnitedStatesaverageoverthefirstthreequartersof2012.InCanada,‘buy’intentionsarehighestinVancouverat 75%, the highest level of response of the Americas markets surveyed.OutsideoftheU.S.andCanada,significantgrowthinhotelperformance metrics has spurred investors’ ‘buy’ intentions to be the highest in the Caribbean, where half of investors are interested in purchasing assets (Figure 2.8).

At the same time, an increased 11% of investors indicated that their primary focus over the next six months will be to sell assets. The concurrent increase in ‘sell’ sentiment suggests that the amount of product available for purchase will increase over the next six months; together the survey responses point to an increasingly dynamic transactions market.

Across the Americas, the proportion of respondents who indicated ‘sell’ as their dominant investment strategy increased to the highest level since June of 2008, as investors perceive an attractive market for dispositions. Survey respondents’ intentions to sell assets are highest in Atlanta (27.3%), Orlando (23.5%), Phoenix (20.6%) and Montreal (20%).

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2.5 |Americasaveragecaprate(initialyield)fornewaquisition

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2.6 |AmericasaverageleveragedIRRfornewaquisition

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Buy Build Hold Sell ^WeightedbynumberofresponsesSource: Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey

2.7 | Americas short term investment intentions 2000 to 2012^


The largest categorical shift in investment intentions was marked by the retraction in ‘hold’ sentiment, which declined by approximately fivepercentagepointsto31.2%,suggestingthatholdperiodsareshortening and investors are more motivated to transact. Cities where the lowest amount of investors indicated a dominant ‘hold’ sentiment include Vancouver, Miami, Boston, Los Angeles and Seattle. The ‘hold’ sentiment on the other hand dominates in Buenos Aires and Mexico City, where investors are looking to hold onto their investments with a view toward future capital appreciation.

Despitetheimprovementinavailabilityofconstructionfinancingforselected projects, such as select service properties and branded hotels in primary markets, along with the continued strengthening of the economy, respondents’ inclination to build hotel assets (6.3% of investors)markedaslightdecreaseintheU.S.Thisdecreasecanprimarily be driven by the fact that construction costs often outweigh thepriceofexistingassetsonaper-keybasis.CitiesintheU.S.whichbuck this trend and have a higher proportion of investors targeting new development include Boston, Denver, New York and Miami. For Latin American markets such as São Paulo and Rio de Janeiro, where there is great opportunity to deepen the stock of institutional-grade hotels, investors’ reported intentions to build are approximately eight timestheleveltheyareintheU.S.

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Mexico City Mexico Resorts

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Tampa Seattle



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Percentage of Respondents Buy Build Hold Sell


2.8 | Americas short term investment intentions


Across the Americas, 51.9% of survey respondents indicated they are targetingupscalepropertiesforinvestment.UpscaleassetscontinuetobethemostsoughtafterassettypeinU.S.markets(Figure2.9).

Theacquisitionofmid-scaleassetsremainsontheradarofinvestorsin primary markets across the Americas, with 19.8% of respondents targeting this asset class. The number of select service asset and note portfolios on the market remains high as institutional owners and special servicers work to clear distress off their books, which is leading to positive momentum in the select service hotel transactions market.

Another 15.7% of respondents indicated they are primarily targeting luxuryassetsforinvestment,seekingtoacquireluxuryassetsinhighbarrier to entry markets at pricing well below replacement cost. In the U.S.,demandforluxuryassetsishighestinMiami,Washington,D.C.,San Francisco and New York.

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Mexico City Mexico Resorts

Sao Paulo Rio de Janeiro

Caribbean Buenos Aires

Vancouver Toronto

Montreal Washington D.C.

Tampa Seattle



Orlando New York

Miami Los Angeles





2.9 | Americas preferred asset type


EMEA overviewHighlights from the survey

• DespitethecurrenteconomicdifficultiesintheEurozone, trading expectations have remained positive for the short and medium term.

• Shorttermtradingexpectationshaveweakenedin southern Europe.

• Capraterequirementsremainstableatanaverageof7.2%with thelowestcapraterequirementsreportedforParis(6.1%)and London (6.3%).

• IRRrequirementshavecontractedby170basispointsto13.7%.

• ‘Buy’intentionshaveremainedstrongwithupscaleassetsbeingthe most sought after asset class.

Trading performance expectations remain positive but weaken in southern Europe

Despite on-going economic volatility in the Eurozone, trading expectations in Europe, Middle East and Africa (EMEA) remain positive for the short term (six months) and the medium term (two years). However, investors are now more cautious in their outlook for the medium term across EMEA, than they are for the next six months (Figure 3.1).

Investors remained confident that all regions of EMEA will see a continued growth in trading performance in the short and medium term, except the Middle East and North Africa (MENA). Sentiment for short term trading was the highest in Scandinavia, followed by Central andEasternEurope(CEE)andWesternEurope.

Consistent with the previous survey, investor sentiment is highest for major gateway markets including London, Paris, Munich, Hamburg, Istanbul and Moscow. These cities posted robust performance results in the first nine months of 2012 and continue to benefit from buoyant leisure and corporate demand (Figure 3.2).

The most positive outlook in terms of trading performance was recorded by Munich, which is Germany’s best performing hotel market and has moved from strength to strength. Positive trading sentiment for both the short and medium term was also recorded for Frankfurt, Hamburg and Berlin.

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Short Term Medium Term ^WeightedbynumberofresponsesSource: Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey

3.1 | EMEA trading performance expectations 2000-2012^

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Zagreb Warsaw

Vienna Stockholm

Spanish Resorts Rome

Riyadh Prague

Paris Munich

Moscow Milan

Marrakech Manchester

Madrid London Lisbon

Jeddah Istanbul

Hamburg French Riviera

Frankfurt Edinburgh Dusseldorf

Dublin Dubai Doha

Copenhagen Casablanca

Cairo Budapest Brussels

Birmingham Berlin

Barcelona Amsterdam Abu Dhabi



3.2 | EMEA trading performance expectations


IntheUK,weakeconomicconditionscontinuetohamperareboundintradingperformance.WhereastheLondonhotelmarkethasdecoupledfromthewiderUKmarket,achievingrobustresultsduetotheSummerOlympics,regionalUKhotelscontinuetostruggleunderconditions of weak demand. Investors’ expectations for short-term trading were negative for Manchester and Birmingham.

Investors were confident that trading will continue to improve in London in the short and medium term, notwithstanding that no major events are scheduled to be hosted in the capital in 2013 and that hotel supply continues to grow. This reflects an overall confidence in the mid to long term prospects for London.

Short term trading expectations for markets in southern Europe have weakened and were particularly negative for Madrid and Lisbon. Hotel markets in southern Europe are plagued by austerity and recession and revenue per available room (RevPAR) at year to date September declined in Madrid (-5.7%), Milan (-2.8%) and Lisbon (-8.2%). On a more positive note, investors believe that trading performance will pick up in the medium term.

Many hotel markets in Central and Eastern Europe have recorded positive operating results in 2012, due to a slowdown in supply growth and a strong increase in leisure tourism. Survey results indicate that trading in the region will continue to improve in the short and medium term.InvestorswereparticularlyconfidentaboutWarsaw’sfuturetradingperformance.ThehotelmarketinWarsawpostedsoundoperatingresultsinthefirstninemonthsof2012duetotheUEFAEuropean Football Championship and it continues to benefit from a robust domestic leisure sector and the country’s dynamic economy. Positive trading expectations were also recorded for Moscow, underpinned by the continued growth in domestic and international corporate travel.

In the Middle East and North Africa, trading performance expectations have improved significantly since our last survey although the outlook still remains slightly negative for the short and medium term. An improvement in sentiment is largely due to an overall stabilisation in the region since the Arab Spring and tourist flows have started to return to countries such as Egypt and Tunisia.

Since the downturn of 2009, Dubai hotels have reported a strong recovery in occupancy and average daily rate (ADR) levels. In light of a slowing development pipeline and political stability in the country, investors believe that Dubai’s operating fundamentals will continue to improve in the short and medium term.

One of the key findings in this survey was a clear north-south divide, with investor sentiment remaining buoyant for gateway cities in northernandWesternEuropebutweakeningsignificantlyformarketsin southern Europe.

IRR expectations hardening due to lower LTV and costlier debt

Survey results indicate a slight softening in capitalisation rate requirements,movingfrom7.0%inApril2012to7.2%inOctober2012. The shift in yield expectations is minor and they remain below theten-yearaverageof7.8%,reflectingcontinuedstronginvestorinterest in hotel real estate in EMEA (Figure 3.3)

IRRrequirementsshiftedmoresignificantly,contractingby170basispointsto13.7%.Thiscanbeexplainedinpartbyrisingfinancingcostsand lower loan-to-value (LTV) ratios, which have declined to about 40- 55%.

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3.3 | EMEA investment yield expectations 2000-2012^


WesternEuropewastheregionwiththelowestcapitalisationrateexpectationsat6.9%.YieldrequirementswereagainthelowestforParis (6.1%), London (6.3%) and key German cities including Frankfurt (6.3%), Munich (6.4%) and Hamburg (6.5%). Investor interest remains strong in these markets which have posted solid growth in trading performance and driven prices to peak levels (Figure 3.4).

IRR and capitalisation rate expectations were above the EMEA average in Central and Eastern Europe. Nonetheless, IRR expectationshavetightenedsinceourprevioussurvey,reflectingthestrong upturn in trading performance that was seen in various CEE markets.Warsaw,thebestperforminghotelmarketintheregion,posted average capitalisation rate expectations of 8.1% and IRR expectations of 14.3%.

Similar to our last survey, Scandinavia showed positive investors interestandthiswasreflectedinstablecapitalisationrateexpectations of 7.2%. The more established hotel markets of CopenhagenandStockholmrecordedcapraterequirementsof7.3%and 7.1% respectively.

YieldrequirementsremainhigherinMENA(atanaverageof8.9%)due to international investors’ perception of higher risk. Dubai yield expectations were at 10% and in line with historic results.

On the whole, investors expect a slight increase in capitalization rates over the next six months, although further contraction is anticipated inWarsaw,Stockholm,MunichandIstanbul.Capitalisationratesareexpected to soften in Rome, Milan, Madrid and Lisbon (Figure 3.6).

EMEA average

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3.4 |EMEAaveragecaprate(initialyield)fornewacquisition

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3.5 |EMEAaverageleveragedIRRfornewacquisition

-30% -20% -10% 0% 10% 20% 30% Zagreb

Warsaw Vienna

Stockholm Spanish Resorts

Rome Riyadh Prague

Paris Munich

Moscow Milan



Jeddah Istanbul



Dublin Dubai Doha



Birmingham Berlin


EMEA Average^

Net Balance (Positive/Higher and Negative/Lower)


3.6 | EMEA cap rate (initial yield) trend over the next six months


Strong ‘buy’ sentiment for upscale and luxury assets

Some 40.4% of respondents say that their main investment activity over the next six months will be to ‘buy’ assets. This represents a decline of 220 basis points when compared to our last survey in April 2012.Webelievethatthecontinueddifficultiesinsourcingfinancefornewacquisitionshavedampened‘buy’intentions,althoughtheyremain comparatively strong and above the ten-year average of 36.2% (Figure 3.7).

‘Buy’ intentions were particularly positive for Germany (47.5% of investors) with a strong interest in hotel real estate in Munich (51.2%), Hamburg (50.0%), Frankfurt (45.9%) and Berlin (41.2%). Unsurprisingly,‘buy’intentionsremainedrobustformajorgatewaycitiesincludingLondon(56.1%),Warsaw(57.1%),Vienna(56.5%),Amsterdam(48.3%)andParis(42.0%).Resultsreflectcurrenttransaction activity with a large number of investors focusing on prime assets in key locations, often driven by overseas capital from the Middle and Far East (Figure 3.8).

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Buy Build Hold Sell ^WeightedbynumberofresponsesSource: Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey

3.7 | EMEA short term investment intentions 2000-2012^

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Warsaw Vienna


Rome Riyadh Prague

Paris Munich

Moscow Milan



Jeddah Istanbul



Dublin Dubai Doha



Birmingham Berlin




3.8 | EMEA short term investment intentions


The intention to buy assets was lowest in MENA (11.4%), as investors preferbuildingoveracquiringexistingbuildings.Nointerestwasrecorded for Dubai and Abu Dhabi.

‘Hold’ intentions have risen by 250 basis points to 32.2%, indicating that the current uncertainty has led to a more ‘wait and see’ approach. Trading fundamentals have started to decline in some European markets and owners might be concerned that lower prices will be achieved if they sell in the next few months. The increase in ‘hold’ sentiment was most extensive in Scandinavia with the intention to hold assets being very high in Stockholm (50.0%) and Copenhagen (43.8%).

‘Sell’ intentions contracted by 240 basis points to 13.2%. Sentiment to sell remained high in challenging markets such as Cairo (50.0%), Lisbon (42.9%) and Birmingham (38.5%).

‘Build’ intentions remained at low levels (14.2% of investors) although they climbed by 200 basis points. This increase was primarily due to a rise in build intentions in the Middle East and Africa where pockets ofopportunitystillexistandasignificantamountofhotelsarestillinpipeline in countries such as Dubai, Qatar and Saudi Arabia.

Overall, however, investors remain reluctant to become involved in hoteldevelopmentsduetothepersistentfinancingdifficulties.ManyEuropean hotel markets are also reaching saturation point in terms of hotel supply and some are battling an oversupply that was created during the boom years. In particular, hotel markets in CEE have seenafloodofnewhotelsenterthemarket,creatinganoversupplysituationincitiessuchasPragueandBudapest,whichconsequentlyrecorded very low ‘build’ sentiment in this survey.

Nonetheless, hotel developments are still occurring especially in strong markets such as London, where another 4,800 bedrooms are expected to enter the market in 2013. It must be noted, however, that asignificantnumberofnewhoteldevelopmentsareconversionsofuse or part of large mixed-use development schemes.

Across EMEA, 28.8% of survey respondents indicated they are targetingupscalepropertiesforinvestment.Upscaleassetsthereforecontinue to be the most sought after assets type in EMEA (Figure 3.9).

A total of 16.8% of respondents indicated that they are primarily targeting luxury assets for investment. Sentiment in this asset class hasstrengthenedsignificantlysinceourlastsurveyunderliningthecurrentflighttoquality.DemandforluxuryassetsishighestinAbuDhabi, the French Riviera and Dubai. Milan and Rome are also marked by a strong appetite for luxury assets.

Investorinterestinmidscalehotels(16.5%)hasdeclinedsignificantlysince our last survey, although it remains comparatively strong in theregionalUKincludingManchester,BirminghamandEdinburgh.The budget hotel and serviced apartment sector recorded the lowest investor interest, in line with previous results. However, there is above average interest in budget hotels in CEE. The budget hotel market in CEE is still relatively immature and offers attractive development opportunities with upside potential for both investors and international hotel operators.

0% 20% 40% 60% 80% 100% Zagreb

Warsaw Vienna


Rome Riyadh Prague

Paris Munich

Moscow Milan



Jeddah Istanbul



Dublin Dubai Doha



Birmingham Berlin




3.9 | EMEA preferred asset type


Highlights from the survey

• Decreaseinshortandmediumtermtradingsentimentcomparedto April 2012 with short term expectations reducing 15.3 points to 12.2% and medium term down 13.7 points to 24.6%.

• ShorttermtradingexpectationsacrossAsiaPacificarenowattheir lowest level since October 2009 with overall sentiment weighed down by negative expectations for China and considerably lower growth in India.

• TradingsentimentisstrongestforSouthEastAsiawithinvestors tipping Jakarta as the region’s growth market with the city topping the rankings for both short (50.6%) and medium term (59.5%) trading.

• YieldrequirementshavesoftenedcomparedtoourApril2012 survey. Expectations for leveraged IRRs recorded a 120 basis point increase to average 17.3%, whereas initial yields (cap rates) recorded a 20 basis point increase to 8.1%.

• Investmentinthesectorlookssettoriseoverthenextsixmonths with an increase in buy (+5.3 points to 42.3%) and build sentiment (+1.8 points to 25.7%). Both are now well above the long term average and are the two most favoured strategies for hotel investmentinAsiaPacific.

• Phuket(53.3%)isthemosthighlysoughtAsiaPacifichotelmarket foracquisitions,whereasBaliisbeingtargetedbyinvestorsfor development with build sentiment (50.0%) the highest for any of the 93 markets we track globally.

Positive trading sentiment softens as global growth slows

InvestorexpectationsfortradingacrossAsiaPacifichavedecreasedcompared to six months ago with short term trading reducing 15.3 percentage points to 12.2% and medium term expectations down 13.7 points to 24.6%.

Globalgrowthslowedduringthesecondquarterof2012afterreboundingduringthefirst.TheslowingwasobservedinallregionsbutwithexternalheadwindsplayingamajorroleinAsiaPacific,astherecovery in advanced economies suffered setbacks.

WeakermomentuminChinaandIndiaalsoweighedonregionaleconomies. According to the International Monetary Fund, GDP growthfelltoitslowestratesincethe2008globalfinancialcrisisduringthefirsthalfof2012.Goingforward,growthisprojectedtopickupverygradually.AsiaPacificshouldremaintheglobalgrowthleaderbut downside risks remain, in particular with regard to the euro area crisisandJanuary2013‘fiscalcliff’intheU.S.

Investor sentiment is strongest for trading in South East Asia over the short term (36.4%) but weakest for North Asia (-2.3%) and India (10.1%).InvestorsexpectIndianhotelmarketstoreboundquicklywith medium term sentiment increasing to 34.8%. This compares to a net balance of 42.4% in South East Asia and 13% in North Asia for positive medium term trading.

Reflectingthechangedeconomicenvironment,investorsratedonlythreeAsiaPacifichotelmarketsabove35%forshorttermtradinginour most recent survey. The strong income growth which has been recorded across the region over the past few years is starting to abate as demand has moderated resulting in RevPAR growth slowing or declininginsomemarkets.Whileinvestorsstillexpectgrowth,ratesofchange will be lower and less uniform.

Current highlights for trading sentiment include Jakarta (50.6%), Singapore (48.1%) and Tokyo (36.8%) over the short term and Jakarta (59.5%), Tokyo (58.1%), Ho Chi Minh City (50.7%), Singapore (44.6%), Bangkok (44.2%) and Phuket (41.1%) over the medium term.

Indonesia’s capital has ranked highly for trading sentiment over the pastyear,reflectingtheattractivevaluepropositionthatthecountrypresents. Home to the world’s 16th-largest economy, Indonesia is booming. By 2030, it is projected to have the seventh-largest economy,overtakingGermanyandtheUnitedKingdom.Thearchipelago nation is also urbanising rapidly, boosting incomes and consumption rates. By 2030, Indonesia is expected to have added 90 million people to its consuming class – more than any other country except China and India.1 This backdrop is providing a boon for hotels with double-digit RevPAR growth across all segments in Jakarta over the nine months to September 2012 being some of the strongest in the region and with the market trading well above previous peaks.

Asia Pacific overview

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4.1 | AsiaPacifictradingperformanceexpectations2000to2012^

1McKinseyGlobalInstitute,Thearchipelagoeconomy:UnleashingIndonesia’spotential,September2012


On the contrary, investor trading sentiment has moved to negative for China’s hotel market with short term trading expectations ranging from -36.9% in Chengdu to -19.5% in Shanghai and with only Shanghai expected to revert to positive territory over the medium term. This dour outlook for the region’s economic juggernaut is weighing heavily on overall trading sentiment and is despite recent statistics where growth was recorded in most major markets over the nine months to September 2012. Expectations for Hong Kong have also declined to the lowest level since April 2009 when the impact of the global financialcrisiswasfirstfelt.

Investors demand higher returns as income growth moderates

Expectations for leveraged IRRs and initial yields both recorded a softening in our most recent survey, increasing by 120 basis points and 20 basis points respectively to 17.3% and 8.1%.

Yield expectations had contracted to record lows in our April 2012 survey but have increased over the past six months as income growth has slowed. This has been the primary driver of investment performance over the past few years. Coupled with the re-emergence of downside risks for the continued recovery of the global economy, this is giving investors cause to seek higher returns in the current risk-averseenvironment.Wenote,however,thatthelatestyieldrequirementsarestillatlevelsconsistentwiththelongtermaverage.

ThemostsignificantchangeinsentimentwasforAustralia/NZwithcap and leveraged IRR expectations both increasing by 80 basis points to 8.8% and 16.5% respectively. Investor expectations for cap ratesinAustralia/NZarenowinlinewiththelongtermtrend(8.8%)whereas expectations for leveraged IRRs are around 100 basis points higher (15.5%).

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Asia Pacific IRR Asia Pacific Yield (Cap Rate) Australia / NZ IRR Australia / NZ Yield (Cap Rate) Asia IRR Asia Yield (Cap Rate)


4.3 | AsiaPacificinvestmentyieldexpectations2000to2012^

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Phuket Bangkok

Jakarta Bali

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Shanghai Macau

Hong Kong Hangzhou

Guangzhou Chendgu

Beijing



4.2 | AsiaPacifictradingperformanceexpectations


Thisshiftinsentimentforcapratesrepresentsasignificantshiftcompared to April 2012 when three markets (Sydney, Melbourne andBrisbane)wereratedatsub8%.Whilstnearingrecordhighs,transaction volumes have been buoyed by a number of large sales and evidence on a broader scale is therefore limited. Capital is primarily being sourced from South East Asia and to a lesser extent China with few domestic players active in the market, particularly onalarge-scale.Ahighdegreeofbuyerspecificityalsomeans that sales which have occurred have been bespoke to the buyer and seller involved.

Investor expectations for Asian leveraged IRRs also increased, up 150 basis points to 17.7% whereas cap rates recorded a slight contraction, reducing by ten basis points to 7.8%. A high response rate for Japanese markets in our most recent survey is thought to have skewed this statistic against the overall softening trend.

On the whole, investors expect no change in regional cap rates over the next six months although some contraction is projected forAustralia(SydneyandMelbourne),NewZealand(Auckland) and Japan.

AustraliaandNewZealandcontinuetorankhighestintheAsiaPacificregionforrealestatetransparencyandthiswillunderpincapitalinflows,particularlywhilstuncertaintyprevails.Activecross-border investors, primarily from South East Asia, China and Latin America,areseekingassetsinlargeliquidmarketswithwhichtheyare familiar. Japan, as well as Australia, has one of the largest and mostliquidrealestatemarketsinAsiaPacificandinvestmentactivityis expected to increase after a hiatus of transactions since the March 2011earthquake.Marketconditionshavealsonormalisedwithtradingrecoverycomingmorequicklythanpreviouslyanticipatedwithmostmajormarketshavingsurpassedpre-quakeRevPARlevelsin summer 2012.

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4.5 | AsiaPacificaverageleveragedIRRfornewaquisition

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Kuala Lumpur Macau Manila

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AP Average^

Net Balance (Positive/Higher and Negative/Lower)


4.6 | AsiaPacificcaprate(initialyield)trendoverthenextsixmonths


Investment capital increasingly targeting the Asia Pacific region

CapitalinflowsintoAsiaPacifichotelrealestateareexpectedtoincrease over the next six months with more investors looking to acquireordevelophotelsacrosstheregionandwithsentimentforboth now well above the long term trend. ‘Buy’ sentiment recorded the most pronounced increase, up 5.3 points to 42.3%, to be well above the average of 34.2%. ‘Build’ sentiment increased by a more marginal 1.8 points and at 25.7% also exceeds the decade average of 18.4%.

Offsetting this was a reduction in ‘hold’ (-4.3 points to 23.7%) and ‘sell’ sentiment(-2.9pointsto8.3%).Consequently,thenumberofinvestorslooking to build hotels has surpassed those looking to hold for the firsttimesincethesurvey’sinceptionin2000asmoreinvestorslooktosecureafootholdintheAsiaPacificregionandcapitaliseonthedawning of the Asian century.

‘Buy’sentimentisatthehighestlevelsinceJune2008,reflectinginpart the re-weighting of portfolios by global investors to sectors and markets which can deliver superior risk-adjusted returns and with higherallocationstorealestate,someofwhichwillflowintohotels.Reflectingthis,privateequityandrealestateinvestmentfundswereidentifiedasthemostacquisitivegroupinourmostrecentsurveyaccounting for over 40% of would-be buyers. This compares to just 15.9% for owner operators and 7.9% for private investors.

InvestorsarefocussedonacquisitionsinNorthAsia(45.3%),SouthEast Asia (44.2%) and the region’s global cities (44.2%). Investor appetite is strongest for Phuket (53.3%), Ho Chi Minh City (50.0%), Auckland (50.0%), Osaka (49.4%) and Tokyo (48.1%). Phuket has alreadyattractedsignificantinvestmentcapitaloverthepast12months and is expected to see more deals early in 2013. Investment activity in Indochina is also expected to re-ignite, although held back by the availability of investment-grade product in the near term.

AsiaPacifichotelmarketscontinuetorankamongthehighestglobally for build sentiment, notching up eight of the top ten spots. Sentiment is highest for Bali, New Delhi and Mumbai with more than 40% of investors favouring a ‘build’ strategy in these markets. Asia’s economic development process is a key dynamic driving construction activity, underpinned by higher household incomes and an expanding middle class. Interestingly, private investors (36.4%) rank highest for ‘build’ sentiment, followed by owner operators (30.5%) and developers (22.0%).

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4.7 | AsiaPacificshortterminvestmentintentions2000to2012^

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Gold Coast Brisbane

Singapore Manila

Kuala Lumpur Ho Chi Minh City

Phuket Bangkok

Jakarta Bali

Seoul Tokyo Osaka Taipei

Shanghai Macau

Hong Kong Hangzhou

Guangzhou Chendgu

Beijing



4.8 | AsiaPacificshortterminvestmentintentions


Midscale segment most favoured across Asia Pacific

In a marked turnaround compared to recent surveys, the mid-segment hasbeenidentifiedastheindustry‘sweetspot’forAsiaPacifichotel investment with 21.4% of investors favouring this asset type. Offsetting this is reduced appetite for luxury (-2.5 points to 17.7%) and upscale hotels (-7.0 points to 19.3%).

MarketsmostfavouredformidscalehotelsareprimarilyinthePacificwith Brisbane (40.6%), Sydney (39.5%), Perth (35.7%) and Melbourne (32.3%)allratedhighly.ExpectationsofaninfluxoftravellersfromAsia over the coming decade, as well as the softer global economic outlook, are thought to underpin current investor appetite for Australia’s mid-segment.

Sentiment for budget hotels has also increased in our most recent survey, up 6.9 points to 14.3% and with investors most focussed on markets in North Asia, particularly Japan, and India.

0% 20% 40% 60% 80% 100%

New Delhi Mumbai

Bangalore Fiji

Auckland Sydney

Perth Melbourne Gold Coast

Brisbane Singapore

Manila Kuala Lumpur

Ho Chi Minh City Phuket

Bangkok Jakarta

Bali Seoul Tokyo

Osaka Taipei

Shanghai Macau

Hong Kong Hangzhou

Guangzhou Chendgu

Beijing



4.9 | AsiaPacificpreferredassettype


The bi-annual Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey (HISS) was established in 2000 to provide the global hotel investment industry with an assessment of the market status and outlook for the short and medium term. This exclusive survey identifiestheweightofopinionoffuturetrendsandalsoestablishesabenchmarkpositiononanumberofkeyissues.Wewouldliketothankall the respondents for their invaluable input into this survey.

Thesurveyistargetedattheworld’sleadinginvestorsand/orownersofhotel/resortpropertiesforthemarketswithinwhichtheyinvestortrack. As the survey is directed only at investors, it does not include advisers or analysts. This report summarizes the outcome of the survey, conducted in October 2012, gathered from responses across more than 20 countries.

About the survey

Russia, 2% Austria, 2% Global, 2% Other, 3%

Singapore, 3%

Australia, 6%

UK, 6%

Japan, 35%

USA, 39%


Survey respondents by country

Institution, 5% Listed REIT, 5%

Other, 7%

Developer, 10%

Private , 14%

Owner operator, 23%

Private equity or real estate investment

fund, 36%


Survey respondents by investor types


MethodologyTrading performance expectations

The survey represents investors’ expectations for trading performance in the short (six months) and medium (two years) term with results presented in line with the weight of opinion.

Net balance is the percentage of respondents who respond positively minus the percentage of respondents who respond negatively. The maximum score of + or – 100% indicates that all respondents have given a positive or negative response respectively. A score of 0% indicates the same number of positive and negative responses toaparticularquestion.

Results are averaged across all respondents for each region and are not weighted by the size of the market (i.e. number of investment graderooms).Weightingisonlyconductedfortheregionalandglobalaverages, based on the number of responses for each city.

Investment yield requirements

Thesurveyrepresentstheinvestmentyield(caprate)levelrequiredto consummate a transaction for a stabilised upscale asset, excluding repositioning through capital expenditure or new management focus. Theseyieldsarethosethatinvestorsseek,whileyieldsrequiredtosuccessfully secure an investment are likely to be lower than the Hotel Investor Sentiment Survey average. These yields should not be applied in any valuation or appraisal assignment.

Results for each city are calculated using the average as a measure of central tendency given the nature of the survey, with results restricted to those that fall within three standard deviations ofthemean.Currentanalysisisnotframedwithregardtospecifictimeframes, asset classes or investment rationale on which the purchasing decision is based.

Results are averaged across all respondents for regional and global averages, based on the number of responses for each city.

Investor intentions

The survey represents investors’ short term investment intentions. Only one response is allowed per market (buy, build, hold or sell) and results are averaged across all respondents and do not include an assessment of where investors hold no interest in a given market. Weightingisconductedfortheregionalandglobalaverages,basedon the number of responses for each city.

Glossary

ADR = Average daily rate IRR = Internal rate of return RevPAR = Revenue per available room

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Rometel: +39 6 4200 6771fax: +39 6 4200 6720

San

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Paulotel:

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Shanghaitel:

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Singaporetel:

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Sydneytel:

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Tokyotel:

+81 3 5501 9240fax:

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Washington, D.C.tel:

+1 202 719 5000fax: +1 202 719 5001

Jones Lang LaSalle Hotels’ dedicated

COPYRIGHT © Jones Lang LaSalle IP, INC. 2012

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.

Atlantatel+1 404 995 2100fax: +1 404 995 2109

Aucklandtel: +64 9 366 1666fax: +64 9 358 5088

Bangkoktel: +66 2624 6400fax: +66 2679 6519

Barcelonatel: +34 93 318 5353fax: +34 93 301 2999

Beijingtel: +86 10 5922 1300fax: +86 10 5922 1346

Birminghamtel: +44 121 643 6440fax: +44 121 634 6510

Brisbanetel: +61 7 3231 1400fax: +61 7 3231 1411

Buenos Airestel: +54 11 4893 2600fax: +54 11 4893 2080

Chicagotel: +1 312 782 5800fax: +1 312 782 4339

Dallastel: +1 214 438 6100fax: +1 214 438 6101

Denvertel: 303 260 6500fax: 303 260 6501

Dubaitel: + 971 4 426 6999fax: +971 4 365 3260

Düsseldorftel: +49 211 13006 0fax: +49 211 13399 0

Exetertel: +44 1392 423696fax: +44 1392 423698

Frankfurttel: +49 69 2003 0fax: +49 69 2003 1040

Glasgowtel: +44 141 248 6040fax: +44 141 221 9032

Istanbultel: +90 212 350 0800fax: +90 212 350 0806

Jakartatel: +62 21 515 5665fax: +62 21 515 5666

Leedstel: +44 113 244 6440fax: +44 113 245 4664

Londontel: +44 20 7493 6040fax: +44 20 7399 5694

Los Angelestel: +1 213 239 6000fax: +1 213 239 6100

Lyontel: +33 4 7889 2626fax: +33 4 7889 0476

Madridtel: +34 91 789 1100fax: +34 91 789 1200

Manchestertel: +44 161 828 6440fax: +44 161 828 6490

Marseilletel: +33 495 091313fax: +33 495 091300

Melbournetel: +61 3 9672 6666fax: +61 3 9600 1715

Mexico Citytel: +52 55 5980 8054fax: +52 55 5202 4377

Miamitel: +1 305 529 6345fax: +1 305 529 6398

Milantel: +39 2 8586 8672fax +39 2 8586 8670

Moscowtel: +7 495 737 8000fax: +7 495 737 8011

Munichtel:

+49 89 2900 8882fax:

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New Delhitel:

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+91 124 460 5001

New Yorktel:

+1 212 812 5700fax:

+ 1 212 421 5640

Paristel:

+33 1 4055 1718fax:

+33 1 4055 1868

Perthtel:

+61 8 9322 5111fax:

+61 8 9481 0107

Rometel: +39 6 4200 6771fax: +39 6 4200 6720

San

Franciscotel:

+1 415 395 4900fax:

+1 415 955 1150

São

Paulotel:

+55 11 3071 0747fax:

+55 11 3071 4766

Shanghaitel:

+86 21 6393 3333fax:

+86 21 6133 5612

Singaporetel:

+65 6536 0606fax:

+65 6533 2107

Sydneytel:

+61 2 9220 8777fax:

+61 2 9220 8765

Tokyotel:

+81 3 5501 9240fax:

+81 3 5501 9211

Washington, D.C.tel:

+1 202 719 5000fax: +1 202 719 5001

Jones Lang LaSalle Hotels’ dedicated

COPYRIGHT © Jones Lang LaSalle IP, INC. 2012

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.

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