Double-Digit Hotel Investment Returns Should Last Until Mid-2008

NEW YORK— Double-digit returns should continue to be the norm for hotel investors until at least mid-2008, according to Hotel Investment Strategies, LLC. Currently, investors are registering 21% total returns, the firm stated. As of June 2006, year-to-date hotel returns were at 20.8% and income and capital returns were at 8.7% and 11.4%, respectively, according to NCREIF. Current hotel returns are the highest the industry has seen since the third quarter of 1998. Hotel Investment Strategies further projected that income returns are likely to average 8.5% for the remainder of the decade. However, the firm also noted that while appreciation returns should remain positive until late 2009, they will then revert to their long-term average of negative 0.5%, which is the lowest of all commercial real estate asset classes.