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7/31/2019 Latin America Hotel Investor Sentiment Survey May 2012
1/12
Market InsightJones Lang LaSalle Hotels inaugural Latin America Hotel
Investor Sentiment Survey highlights investors hotel
performance outlook, reveals investors targeted investment
yields and investment strategies, and ranks the key constraints
to investment for 18 markets across Latin America.
Latin America Hotel
Investor Sentiment Survey
May 2012
Jones Lang LaSalle Hotels know how
7/31/2019 Latin America Hotel Investor Sentiment Survey May 2012
2/12
Contributors
Clay B. Dickinson
Executive Vice President
Latin America Region
+1 202 719 6225
clay.dickinson@am.jll.com
Ricardo Mader
Executive Vice President
South America
+55 11 3071 0747
ricardo.mader@am.jll.com
Fernando Garcia-Chacon
Executive Vice President
Mexico/Caribbean/Central America
+1 305 529 6342
fernando.chacon@am.jll.com
Lauro Ferroni
Vice President
Americas Research
+1 312 228 2566
lauro.ferroni@am.jll.com
advice, valuations, investment sales and asset management for luxury hotels, select service and budget hotels, smaller hotels and pubs, from
single assets to large portfolios and mixed-use developments.
7/31/2019 Latin America Hotel Investor Sentiment Survey May 2012
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Latin America Hotel Investor Sentiment Survey
Highlights from the survey
Investors outlook for hotel performance fundamentals across Latin
Mexico City, Brazilian metropolitan areas, Los Cabos and Cancun/
Riviera Maya.
Respondents targeted capitalization rate (initial yield) for the
Latin America.
countries capital cities.
performance of the lodging industry across Latin America, creating
Hotel performance outlook exceedingly positive
Hotel investors have a positive outlook for hotel performance across
most markets in Latin America. Jones Lang LaSalle Hotels computed
the net balance of investors responses to measure respondents
by revenue per available room (RevPAR).
they have a positive, negative, orneutral outlook for RevPAR
together to compute a net balance.
balance indicates that more investors expect performance to
decline than to increase during the given time period.
-60 -40 -20 0 20 40 60 80 100
Argentina
Chile
Brazil
Peru
Colombia
Central America
Mexico
Next six months
Net balance of investors hotel performance expectations
Source: Jones Lang LaSalle Hotels
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2
have the most optimistic hotel performance outlook for Brazil, both for
demand amid a constrained supply environment and upcoming events
The net balance of positive hotel performance expectations is at
the second highest level for Mexico, supported by the countrys
ameliorating economic outlook. In Mexico, the net balance of survey
driven by the performance outlook for Lima.
Responses indicated a positive hotel performance outlook for hotels in
across markets in Brazil and Mexico.
for the next six months: The net balance of investor performance
respondents expects RevPAR to decline than to increase. For the
and consumption.
Capitals and large secondary markets command most favorable
performance outlook
The country by country performance expectations summarized in
the previous section represent an average of the responses for each
responses for each individual market contained in the survey.
-60 -40 -20 0 20 40 60 80 100
Mexico City
Guadalajara, Monterrey
Los Cabos, Cancun/Riviera Maya
All Other Mexico
Panama City
Resorts - Costa Rica/Panama
Bogot
Cartagena
All Other Colombia
Lima
All Other Peru
Rio de Janeiro, So Paulo
Brazil Metros 3-6 Million Residents
All Other Brazil
Santiago
All Other Chile
Buenos Aires
All Other Argentina
Next six months
Mexico
Central America
Colombia
Peru
Brazil
Chile
Argentina
Net balance of investors hotel performance expectations
Source: Jones Lang LaSalle Hotels
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three to six million residents exhibited the most optimistic outlook. The
a relatively constrained supply pipeline due to the high barriers to entry
in the citys prime hotel submarkets.
urban centers, in particular the next-largest cities after So Paulo
and Rio de Janeiro, such as Fortaleza, Braslia, Recife, Manaus and
Curitiba.
Summarizing investors responses by type of market also yields a
expectations for hotels across the board, the highest results on a
capital cities has been much talked about, respondents evidenced just
Another interesting data point compiled from survey respondents is
for the rest of country categorythe net balance of performance
above the six-month outlook. This suggests that investors expect hote
Latin Americas cities over the medium term, suggesting the feasibility
for branded limited service hotels in a number of markets currently no
served by international-grade hotel stock.
0 10 20 30 40 50 60 70
Rest of country
Large secondary cities
Next six months
Net balance of investors hotel performance expectations
Source: Jones Lang LaSalle Hotels
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4
Attributable to the relative maturity of the citys real estate market,
the market. Due to a higher level of perceived risk, investors target cap
comparisons among cities, clusters of cities, or countries. For example,
survey responses suggest a 130 basis point cap rate premium inMexico City compared to Guadalajara/Monterrey. Similarly, investors
Cartagena or Bogot versus the rest of Colombia.
Cap rate expectations lowest for gateway markets
across Latin America markets. Respondents targeted capitalization rate
Investors' lowest capitalization rate (initial yield) by market
Note: pertains to institutional-grade full service hotel assets
Source: Jones Lang LaSalle Hotels
9.1
11.2
11.5
12.1
1
1
1
MexicoCity
RiodeJaneiro,
SoPaulo
LosCabos,
Cancun/RivieraMaya
Santiago
Lima
Guadalajara,
Monterrey
PanamaCity
Cartagena
Bogot
BrazilMetros3-6
MillionResidents
Resorts-
CostaRica/Panama
BuenosAires
AllOtherPeru
AllOtherChile
AllOtherMexico
AllOtherColombia
AllOtherBrazil
AllOtherArgentina
Lost capitalization rate (initial yield)
Latin America average
7/31/2019 Latin America Hotel Investor Sentiment Survey May 2012
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invest in these markets according to the survey.
non-urban areas in the rest of the country, indicating that there are lar
IRR of 2.4 percentage points higher in Buenos Aires as compared to
Santiago due to the additional tier of perceived market risk.
Capitals/key gateway cities are buy targets; secondary cities ar
market to build
strategy (buy, build, hold, sell) across markets applicable to them. The
this as their primary investment strategy.
markets. This distribution of responses implies that investors are
expected future asset appreciation. The imbalance in the number
considerable amount of interest.
Survey respondents average unleveraged internal rate of return (IRR)
urban areas of Colombia, Peru and Argentina.
Rest of country
Large secondary cities
Buy Build Hold Sell
Respondents primary investment strategy by market type
Source: Jones Lang LaSalle Hotels
Investors' lowest unleveraged rate of return requirement by market
Note: pertains to institutional-grade full service hotel assets
Source: Jones Lang LaSalle Hotels
16.2
16.4
17.1
18.0
18.4
18.9
19.0
19.4
20.0
20.3
20.4
20.4
21.7
22.8
22.8
24.0
24.4
24.8
10
15
20
25
30
RiodeJaneiro,
SoPaulo
MexicoCity
Santiago
BrazilMetros3-6
MillionResidents
LosCabos,
Cancun/RivieraMaya
PanamaCity
Guadalajara,
Monterrey
Lima
AllOtherChile
Cartagena
Bogot
BuenosAires
AllOtherMexico
Resorts-
CostaRica/Panama
AllOtherBrazil
AllOtherColombia
AllOtherArgentina
AllOtherPeru
Unleveraged internal rate of return IRR)
Latin America average
7/31/2019 Latin America Hotel Investor Sentiment Survey May 2012
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6
limited existing international-grade hotel stock available for purchase.
The dominant investment strategy for the lions share of respondents in
The proportion of hotel investors seeking to develop hotel properties
are higher, notably in markets such as Mexico City and Rio de Janeiro.
Brazils next-largest urban centers such as Fortaleza, Recife, Manaus
the appetite to expand the depth of the hotel stock is ripe.
Respondents hot picks by investment strategy
Buy
Rank Market
1 Mexico City
2 Panama City
3 Rio de Janeiro, So Paulo
4 Lima
5 Santiago
Build
Rank Market
1 Brazil Metros 3-6 Million Residents
2 Cartagena
3 Bogot
4 All Other Brazil
5 Lima
Hold
Rank Market
1 Buenos Aires
2 Panama City
3
4 All Other Colombia
5 All Other Chile
Sell
Rank Market
1 All Other Argentina
2 Los Cabos, Cancun/Riviera Maya
3 Guadalajara, Monterrey
4 All Other Mexico
5 Buenos Aires
Source: Jones Lang LaSalle Hotels
South Americas most populous countries such as Brazil and Colombia
outside of the key cities is substantial, and the survey responses
support this concept.
Respondents primary investment strategy by market
Source: Jones Lang LaSalle Hotels
Mexico City
Guadalajara, Monterrey
Los Cabos, Cancun/Riviera Maya
All Other Mexico
Panama City
Resorts - Costa Rica/Panama
Bogot
Cartagena
All Other Colombia
Lima
All Other Peru
Rio de Janeiro, So Paulo
All Other Brazil
Santiago
All Other Chile
Buenos Aires
All Other Argentina
Buy Build Hold Sell
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Constraints to hotel investment vary by country
constraints. On the other hand, concerns over political/economic
stability are less applicable in Mexico. In Central America, investors
primary constraint to further investment.
Mexico
Rank
1 Availability of credible partners (developers/operators)
1 Security concerns/violence3
3
5 Political/economic stability
Central America
Rank
1
2 Availability of credible partners (developers/operators)
3
3 Political/economic stability
5 Security concerns/violence
Colombia
Rank
1
1 Availability of credible partners (developers/operators)
1 Political/economic stability
4
5 Security concerns/violence
Peru
Rank
1
2 Availability of credible partners (developers/operators)
3 Political/economic stability
4
5 Security concerns/violence
Brazil
Rank
1
2 Availability of credible partners (developers/operators)
3 Political/economic stability
4
5 Security concerns/violence
Chile
Rank
1 Availability of credible partners (developers/operators)
1 Political/economic stability
1
4
5 Security concerns/violence
Argentina
Rank
1 Political/economic stability
2
3 Availability of credible partners (developers/operators)
3 Security concerns/violence
5
Source: Jones Lang LaSalle Hotels
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8
political/economic stability, implying that investors have not forgotten
the countrys shakier political past. For Peru, the distribution of
established third-party hotel management companies in Brazil, for
being too large in Brazil.
In Argentina, political/economic stability is at the top of the list of
This implies that the investment community does not believe that
the country faces notable supply pressures as some investors have
delayed projects in light of the economic uncertainty and public debt
concerns that Argentina faces.
Latin Americas hotel investment landscape undergoing
transformation
ideological to more pragmatic.
market is expected to transform itself over the next decade. Though
boosting the performance of the lodging industry across Latin America,
About the survey: Jones Lang LaSalle Hotels survey is
opinions of advisors or analysts. Results are averaged across
7/31/2019 Latin America Hotel Investor Sentiment Survey May 2012
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7/31/2019 Latin America Hotel Investor Sentiment Survey May 2012
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COPYRIGHT JONES LANG LASALLE IP, INC. 2012
All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable.
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