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NEW YORK CITY—As the US economy enters its sixth year of expansion, and volatility heightens in the public equity markets, the chase for yield is intensifying and expanding the supply of US focused capital. Despite increased caution and continued institutional market discipline, lodging fundamentals remain strong with few markets facing development driven supply issues and room rates well positioned for continued growth through at least 2016. With strong income appreciation and many investors pricing rising interest rate risk into underwriting, the US lodging investment market remains well positioned to absorb controlled modest interest rate increases.

(Click the image above to download the survey result for major US hotels.)

Overseas capital has become a major force in the US hotel investment market as weak economic growth prospects in many international markets, as well as perceived relative stability and security in America, has resulted in a significant amount of foreign capital pursuing US hotel assets. Although growth prospects in the sector have softened in the wake of global economic concerns and volatility, strong underlying fundamentals continue to buoy the US lodging investment arena.

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