According to STR Analytics' Hotel Investors Gauge, debt and equity trends remained steady during the third quarter despite hiccups in the global marketplace.
"Although the national and global economies seem to be on a rollercoaster ride of late, hotel investment continues to have a strong outlook," said Steve Hennis, director at STR Analytics. "The hotel investment climate is highly appealing with low supply growth, demand at an all-time high and interest rates at very low spreads."
Other key findings from the Hotel Investors Gauge include:
Leveraged return expectations for both buyers and developers are still around the typical 20-percent range.
Lenders are willing to provide debt at good terms. Loan-to-value ratios averaged 68 percent with interest rates benchmarked at an average of 350 basis points above the London Interbank Offered Rate.
New York is both loved and feared by investors. New York; Washington, D.C.; Boston; Miami; and Los Angeles are the top five most appealing markets for investors. On the flip side, Detroit; St. Louis; New York; Tampa-St. Petersburg; and Orlando are the markets investors are least likely to consider for investment.
The outlook is optimistic through at least 2014. More than 90 percent of respondents expect the next market peak to come after 2013, with more than a third of those surveyed expecting the next market peak to occur during 2016.