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West Coast Hotel Sector Improves, Mirrors Economy

LOS ANGELES-With global hotel investment activity up 17% last year over 2010 and RevPAR rates on the rise, investors are growing optimistic about this sector’s outlook.

By Carrie Rossenfeld | Updated on September 05, 2012

LOS ANGELES-With a dearth of available properties and a wealth of investors seeking them, the hotel space is looking up, say industry experts. According to Jones Lang LaSalle Hotels research, global hotel transaction volume during 2011 totaled $31.2 billion, a 17% increase over 2010, and hotel real estate investment in the Americas reached a four-year high last year, with transaction volume swelling to $15.2 billion, a 24% year-over-year rise. However, Atlas Hospitality Group reports that improving hotel fundamentals are causing more hotel owners to hold onto their properties, which is hurting the investment market.

Locally, the West Coast hotel sector is following global trends. “I’d say the state of the West Coast hotel market is very strong, and it’s continuing to improve,” Tony Muscio, SVP of JLL Hotels, tells GlobeSt.com. “You have RevPAR continuing to increase, thanks to occupancy fueled by group, corporate and leisure demand. Also, there’s a lack of new hotel supply, so not as many hotel rooms are being built, which helps this dynamic. And finally, the high barriers to entry on the West Coast make it hard to build in many markets.”

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