Asia-Pacific Hotel Sector Is Recovering.

Dec. 3--While hotel markets worldwide have undoubtedly been adversely affected by the Sept 11 attacks, there is underlying strength in the sector, says Jones Lang LaSalle Hotels, a global hotel investment services group.

The challenging market conditions presented risks, but there were definite opportunities for the well-informed investor, said Peter Barge, the chairman and chief executive of Jones Lang LaSalle Hotels.

Scott Hetherington, the executive vice-president, said that throughout the Asia-Pacific region, economic fluctuation had driven down hotel performance ratios, a trend that had begun prior to Sept 11.

According to Mr Hetherington, deals in the Asia-Pacific region and Europe are on track, although pricing may soften slightly.

The hotel sector would recover as it had done in the past and investors would enjoy considerable capital and income appreciation in the medium to long term, he said.

But access to capital would remain a critical factor in hotel investment. Market uncertainty would be priced into hotel transactions in the form of higher discounts, lower loan-to-value ratios and higher debt-service-coverage ratios. Although lending institutions were understandably cautious, they were active and deals could be financed.

Mr Hetherington said that investment markets over the next 12 months were likely to see volatility in pricing as investors adopt differing assumptions for recovery and growth. However, there would be continued interest in the sector from the investment markets with the right structure in place.