Historical Performance Alone No Basis for Future Expectations; Colliers PKF-HR Reports

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Colliers PKF Hospitality Research (Colliers PKF-HR) weighs in on changes in RevPAR, indicators of future market performance, and the timeliness of lodging investments in the July Hotel Horizons® Market Update.

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We are confident that hotel income will begin to increase in 2011 and should persist at a very attractive rate well beyond.

The July 2010 Hotel Horizons® Market Update presented by Colliers PKF-HR focuses on key issues in the hotel and hotel real estate industries: when RevPAR growth will return, when to invest in hotel real estate and where to make those investments. Hotel Horizons® Market Update is a series of videos featuring the latest research from Colliers PKF-HR.

Recent hotel statistics indicate that certain markets are beginning to see positive RevPAR growth, while local hotel forecasts suggest that many markets will not see growth until well into 2011.

A very important topic, especially as prices seem to have bottomed out and might now be on the rise, is the subject of where to invest in hotel real estate. To answer this question, Colliers PKF-HR first looked to the past. Of the top five market leaders in RevPAR growth from the period 2003-2008, only one of those markets remained in the top five in the period 2009-2014. On the other hand, the five markets that achieved the lowest RevPAR growth from the period 2003-2008 were nearly identical to the performance change achieved by the top five markets from 2003-2008 in the period 2009-2014. This indicates that historical performance is not necessarily a predictor of future movement. Instead, Colliers PKF-HR stresses the importance of performing macro-economic analyses when predicting future performance.

"We have to focus on the economic fundamentals that underlie each market to provide us with a clear picture of what will occur in the future," says Aaron Walls, a hotel research analyst with Colliers PKF-HR. With this knowledge in mind, Colliers PKF-HR has used the Hotel Horizons® forecasting model to predict the top markets for RevPAR growth in the next five years.

A final point worth noting is the timeliness of investing. With hotel income expected to rebound from a record-setting decline in 2009, now is a great time to invest in the hotel real estate industry.

"We are confident that hotel income will begin to increase in 2011 and should persist at a very attractive rate well beyond. This suggests that the opportunity to invest capital in hotel real estate will likely yield attractive rewards in the years ahead," says Mark Woodworth, president of Colliers PKF-HR.

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