DENVER—Senior executives in the lodging industry overwhelmingly are bullish about developing in the current climate. That’s among the key findings in this year’s LIIC Top Ten from the Lodging Industry Investment Council. Mike Cahill, CEO and founder of HREC and co-chair of the council, produced this year’s survey.

The survey of LIIC members found that 70% believe that the next 12 months represent a good time to build/develop hotels, provided that you’re selective about the product and the market. Just 18% believe that generally speaking, it’s better to buy than to build, a smaller percentage than in last year’s LIIC Top Ten.

Conversely, though, the current climate is also opportune for investments in lodging. More than two-thirds of respondents think the sector is in the fifth to sixth inning of a nine-inning game with regard to the lodging investment cycle, with half of respondents likening the current point in the cycle to 2005. In other words, the sector is in the midst of a longer, slower cycle. As Cahill put it in a seminar HREC sponsored jointly with Interstate Hotels last month, “This is one of those rare times you get every cycle where you can say ‘the window is wide open and it’s beautiful outside.’”

Ninety-eight percent of survey respondents believe that lodging real estate values will continue to increase over the next 12 months, with 81% predicting increases of up to 10%. The luxury/upper-upscale/upscale category is expected to see the greatest increases in values. Fifty-two percent of LIIC members surveyed said that values wouldn’t peak until 2017 at the earliest.

At the same time, LIIC members are predicting an increase in transaction volume, as well. Eighty-three percent said they believe that calendar 2015 overall hotel asset sales volume will be greater than actual/forecasted year-end 2014 level.

In general, survey respondents are expecting strong market movement, fluidity and volume next year, but express growing concerns that rapidly accelerating new supply could hamper transaction volume and/or asset pricing in certain markets. Survey results also indicate how far the recovery has come, with 90% of investors expecting that purchases over the next 12 months will result from “typical acquisition channels.” In 2009, 82% expected to gain control of hotel assets either as REOs or via distressed debt.

Lenders, too, are becoming more active in the sector. Eighty-three percent of survey respondents expect the availability of hotel debt lending to continue improving over the next 12 months, with 59% believing “slightly better” and 24% predicting “much better.” Sixty-eight percent expect loan/value ratios to increase, thus allowing for greater investment leverage.

Underpinning this confidence is strength in the underlying fundamentals of lodging. In the HREC/Interstate Hotels seminar last month, HREC president Geoff Davis said occupancy would remain strong through next year, although he added that it would then begin slowing down as new supply came on line.