Headlines – Week of November 13, 2011

November 18, 2011

Smith Travel Research Updates U.S. Hotel Forecasts

The U.S. hotel industry is expected to end 2011 with a 4.0-percent occupancy increase to 59.9 percent, a 3.6-percent increase in ADR to US$101.58, and a 7.7-percent increase in RevPAR to US$60.81. Supply in 2011 is forecasted to rise slightly (0.7 percent) and demand is expected to end the year with a 4.7-percent increase.

Smaller increases are forecasted in all three key performance metrics for year-end 2012, according to STR’s updated industry forecast.

STR revised 2012 forecast includes:

  • 0.2-percent increase in occupancy to 60.0 percent;
  • 3.7-percent jump in average daily rate to $105.29; and
  • 3.9-percent rise in revenue per available room to $63.18.

STR also predicts that 2012 year-over-year demand will increase 1.1 percent and supply will rise 0.9 percent.

The change in the forecast is a result of the continuing global economic uncertainty and the tougher year-over-year comparisons the industry will face in 2012.

In 2011, STR is forecasting a 4.0% occupancy increase to 59.9%, a 3.6% increase in ADR to $101.58, and a 7.7% increase in RevPAR to $60.81. Supply in 2011 is forecasted to rise slightly by 0.7% and demand is expected to end the year with a 4.7% increase.

Large increase in hotel foreclosures expected next year

A recent story by Bloomberg quotes Robert Sonnenblick, chairman of Sonnenblick Development LLC, who says that there will, in fact, be a “huge increase” in U.S. hotel foreclosures next year as debts come due coupled with a still pervasive lack of financing.

While the past couple of years have been rife with tales of U.S. hotel foreclosures due to economic calamity, the thought was that the hotel recovery would be the anodyne needed to stem the tide.

According to Sonnenblick, the wave of commercial mortgage-backed securities needing replacement debt is going to be a close-to-catastrophic problem.  He believes that the end result of all of this is “you’re going to see a huge increase of hotel foreclosures.”

According to Realpoint, the securities ratings firm owned by Morningstar Inc., approximately $21.7 billion in CMBS on 232 hotels is coming due in the next 12 months and need to be refinanced.

While the hotel industry has begun to recover, particularly in gateway cities, financing for new construction continues to be an impediment. Part of the problem is that the expectation that hotels will come on the market makes lenders skittish to lend.

However, this is not just a U.S. problem. Bloomberg reports that European banks “will be forced to sell more distressed commercial property loans in the coming year, as more borrowers default.”

Two Real Estate Reports Suggest Florida Rebound

Two recent national studies, one from Realtor.com and one from Trulia suggest that some Florida markets are poised for a real estate rebound.

In Realtor.com’s “Top Ten Turnaround Report,” six Florida cities were considered good bets for an upswing in sales. Realtor.com, which is owned by The National Association of Realtors®, says it created a formula to rank a city’s turnaround potential based on recent price appreciation, changes in inventory, median age of inventory, number of Realtor.com searches by visitors and area unemployment.

Realtor.com attributes the Florida cities’ success to year-over-year home price increases, reductions in inventory, lower unemployment rates and, in some cases, an upswing in international buyers.

Realtor.com’s turnaround list includes:

  1. Miami: Ranked No. 1 in the report, Miami hit the top based on “a healthy inventory that is only half the size from a year ago,” a lower foreclosure rate than the national average, and an increase in condo sales.
  2. Orlando: While No. 2, Realtor.com says Orlando had more home searches than any other city when compared to the total number of listings. It also had a significant drop in the number of foreclosures.
  3. Fort Myers-Cape Coral: Median prices in Fort Myers-Cape Coral have increased year-over-year, foreclosures are down, inventory is lower and foreign buyers are attracted to the area’s real estate prices.
  4. Phoenix-Mesa, Ariz.
  5. Fort Lauderdale: Inventory has decreased and prices have increased, says Realtor.com.
  6. Sarasota-Bradenton: About one in 10 foreign buyers look in Sarasota-Bradenton for a home, Realtor.com says. Listing prices have increased and inventory has decreased.
  7. Lakeland-Winter Haven: According to Realtor.com, the number of distressed sales has decreased significantly and prices have gone up.
  8. Boise City, Idaho
  9. Fort Wayne, Ind.
  10. Ann Arbor, Mich.

Trulia recently debuted a new report that analyzed its home searches.

In one study, Trulia looked at the number of people who searched for housing in a city (including renters) and compared it to the number of city residents looking elsewhere for a home. An area with a high number of inbound searches and a low number of outbound searches suggests an increased demand for housing according to Trulia.

According to the study, the North Port-Bradenton-Sarasota area had six times more searches by inbound people than outbound people, landing it in the list’s No. 1 position, but four other Florida cities also made the top 10 list:

  1. North Port-Bradenton-Sarasota
  2. Riverside-San Bernardino-Ontario, CA
  3. Charleston-North Charleston-Summerville, SC
  4. Fort Lauderdale-Pompano Beach-Deerfield Beach
  5. Cape Coral-Fort Myers
  6. West Palm Beach-Boca Raton-Boynton Beach
  7. Fort Worth-Arlington, TX
  8. Oxnard-Thousand Oaks-Ventura, CA
  9. Las Vegas-Paradise, NV
  10. Orlando-Kissimmee-Sanford

Trulia also looked at the Chicago and New York City markets to see where residents wanted to move.

Three Florida cities ranked in the top 10 for Chicago residents: Tampa-St. Petersburg-Clearwater (No. 4), Cape Coral-Fort Myers (No. 6) and Orlando-Kissimmee-Sanford (No. 10).

In New York City, five Florida cities made the list: Miami-Miami-Beach-Kendall (No. 2), Orlando-Kissimmee-Sanford (No. 3), West Palm Beach-Boca Raton-Boynton Beach (No. 5), Fort Lauderdale-Pompano Beach-Deerfield Beach (No. 6) and Tampa-St. Petersburg-Clearwater (No. 7).

see Realtor.com Top Ten Turnaround Report – here

see Trulia Metro Movers Report – here

Posted by Scott R. Lodde

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