CHICAGO-The market for hotels is the strongest it has been since September 2000, according to Jones Lang LaSalle Hotels. The firm's Hotel Investor Sentiment Survey reveals 65% of the largest US owners and investors are in a buying mode, as are 45% in the global marketplace. The company surveyed 2,000 owners and investors for the report.

"The US will be a transaction and trading hot spot in 2006, with investors overwhelmingly positive about hotel property," according to the report. "This is despite the recent hurricanes, increasing energy prices and interest rates creeping up."

Rising interest rates have increased investors' expectations, with their capitalization rate threshold rising nearly a half percentage point to 8.4% while their required internal rates of return jumped by more than a full point to 18.5%. However, Jones Lang LaSalle notes those required yields are down from four years ago, from a cap rate of 11.3% and internal rate of return of 23.5%.

"There are 10 buyers for every seller in key urban gateway markets such as San Francisco, Chicago, New York, Washington, DC and Hawaii," according to the report. "These markets are deemed to have the best potential for continued trading performance throughout 2005 and into 2006, primarily due to high barriers to entry and their appeal to domestic and international travelers."