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Real Estate Investment
Jones Lang LaSalle Hotels
Serviced Apartment Investments
First Hospitality Group
New research has revealed a rising number of institutional investors are turning to the select-service hotel sector. According to Jones Lang LaSalle Hotels, the industry presents an attractive proposition, due to its diversification and customisation over the past decade. The firm noted select-service hotels are increasingly being added to the portfolios of large-scale investors that have typically targeted the full-service or upscale side of the hospitality sector.Managing director at Jones Lang LaSalle Hotels Mark Fair commented: "Simply put, a wide range of new investors recognised select-service hotels as more profitable. As long as they stay with the primary brands and institutional grade construction, they view them as superior to full-service products in terms of return on investment." He added this sector currently delivers the highest yield in the industry, making it a potentially lucrative choice as a real estate investment. Mr Fair explained that as the sector has developed, the hotels at the top end have come to provide a similar offering to luxury establishments, including meeting and conference facilities, technology and food and drink outlets, but at a lower entry cost than the deluxe hospitality industry offers.Late last year, president and chief operating officer of First Hospitality Group Robert Habeeb wrote in Lodging Hospitality that the select-service sector "is certainly more resilient than other pieces of the industry puzzle". He went on to point out the segment is well-positioned to ride out economic difficulties, which serves to make it all the more attractive given the current global climate. "The select-service model represents a great consumer offering: predictable, user-friendly with a reputation for staying away from unnecessary charges. That reputation and newfound diversity was a significant asset when the economy took a turn for the worse in 2006 and 2007," he concluded. Another reason for the popularity of select-service hotels among institutional investors is the pricing, according to managing director at Jones Lang LaSalle Hotels Al Calhoun. He highlighted the price of one luxury establishment can equate to several select-service businesses in different locations, which in turn can diversify the risk of a portfolio.
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