DLA Piper 2012 Hospitality Outlook Survey Reveals 'Strong' Appetite for Deals

The expectations of US hospitality executives have tempered, but the overwhelming majority remain bullish on the marketplace as investors look to pick up where they left off in 2011 – hunting for deals, according to the DLA Piper 2012 Hospitality Outlook Survey revealed today at the Americas Lodging Investment Summit. With that in mind, the US hospitality industry will also keep a watchful eye on Washington, DC in 2012 as the country prepares for further political gridlock amid another election-year showdown for the White House.

The survey, measuring the attitudes and perspectives of top executives within the hospitality industry, reveals that eight out of 10 respondents describe their 12-month outlook for the US hospitality industry as “bullish,” down from 88 percent in 2011. According to respondents, a strong appetite exists for hotel transactions, fueled in part by an expected – and significant – uptick in private equity investment activity, as well as flattening asset values. These factors are expected to far outweigh any concerns over hotel debt issues or any election-related market malaise in 2012.

Taking a look at the operational side, the emergence of “daily deal” websites has created an interesting promotional opportunity for the US hospitality industry. While only 19 percent of respondents reported using these sites for promotions, nearly all those who did cited them as a source of repeat business.

“Enthusiasm remains high but the hospitality marketplace is in a period of transition,” said Sandra Kellman, global co-chair of DLA Piper’s Hospitality and Leisure practice. “Looking ahead, it is clear that the industry expects that there will be some deal velocity, although it may be choppy.”

According to DLA Piper, the survey yielded a number of other interesting conclusions, including:

• 80 percent of respondents describe their 12-month outlook for the US hospitality industry as “bullish,” down from 88 percent in 2011.


• For the second consecutive year, 9 out of 10 respondents believe that market conditions have created good buying opportunities for well-capitalized investors.


• 78 percent of respondents believe that the political gridlock in Washington, DC poses a chief threat to the recovering US hospitality industry.


• Only 47 percent of respondents expect hotel asset values to rise in 2012, down sharply from 82 percent of respondents in 2011.


• Private equity investment is on the upswing: 76 percent of respondents expect private equity investors to be the most active in 2012, jumping up from 40 percent in 2011.


• 9 out of 10 respondents expect that the industry’s “debt hangover” will force more hotel properties into the marketplace in the coming year.


• Representing the first drop in three years, 29 percent of respondents expect that their hotel debt will be refinanced or restructured in 2012 – down from 37 percent in 2011.


• Only 19 percent of respondents participated in “daily deal” website promotions in 2011, but of these respondents, 90 percent cited these deals as sources of repeat business.


• Respondents rank TripAdvisor and Expedia as the two most influential websites for travel customers, easily trumping the influence of social media’s “Big Three” – Facebook, Twitter and LinkedIn.

About DLA Piper (www.dlapiper.com) 

DLA Piper has 4,200 lawyers in 30 countries and 76 offices throughout the United States, Europe, Asia Pacific and the Middle East. In certain jurisdictions, this information may be considered attorney advertising.

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