CHICAGO-There could be a record $110 billion of hotel transactions this year, according to Jones Lang LaSalle Hotels, part of locally based Jones Lang LaSalle. In the first half of the year, there were $56 billion in transactions and it is predicted the second half of the year will have a similar monetary amount of transactions, says Arthur de Haast, global chief operating officer of Jones Lang LaSalle Hotels. Jones Lang LaSalle Hotels recently released its 14th edition of its Hotel Investor Sentiment Survey.

The high amount of transactions for the first half of the year was influenced by the CNL Hotels & Resorts acquisition by Morgan Stanley and Ashford Hospitality Trust; the acquisition of Equity Inns by Whitehall Street Real Estate Funds; and the acquisition of Highland Hospitality Corp. by JER Partners Acquisitions, de Haast says. The value of the three transactions combined is about 20% of the total transactions for the first half of the year, he says. The volume of transactions is higher, particularly in the North American market, and is driven by “REITS being taken private by the private equity players,” he says. One of the largest transactions in the Americas was the acquisition of the Makena Resort by Morgan Stanley Real Estate Fund V US and the Dowling Co. Inc. for $575 million.

The monetary value of transactions for the second half of the year will be similar to the first half but will be influenced by the acquisition of Hilton Hotels Corp. by Blackstone, de Haast says. “Although the number will be big, the actual number of transactions will decline slightly,” he says. The largest percentage increase in transactions is expected to be in Asia Pacific where there is projected to be a 70% increase from the $5.3 billion worth of transactions in 2006 and the forecast $9 billion of transactions in 2007. “The absolute numbers are still pretty small but that is where the long-term growth is going to be as investors seek opportunities in these fast growing markets,” de Haast says.

The number of investors looking to buy hotels has increased and, according to the survey, global potential buyers outnumber sellers by nearly four to one with 43% looking to buy with only 11.5% of investors planning to sell. There were 36.5% of investors planning to buy in the survey conducted by Jones Lang LaSalle Hotels last November. Cap rates are continuing to tighten with investors willing to reduce yield requirements to enter the market, according to the survey. The majority of respondents in the most recent survey were interested in buying upscale and luxury assets, according to the survey. Although in Asia Pacific, “all grades of accommodation” was the most chosen response for hotel asset that investors sought to acquire. There is also an increase in the number of respondents planning to build hotels, with a total of 23.4% expecting to develop hotels.

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