NEW YORK— According to Hotel Investment Strategies, there are currently significant pricing inefficiencies throughout the hotel investment sector that could provide strong risk-adjusted return opportunities for investors. While as a whole the sector is priced correctly, Hotel Investment Strategies pointed out that the lodging sector is much more inefficient in asset pricing in comparison to other real estate asset classes. Currently, 28% of all full-service hotel markets are underpriced on a risk-adjusted return basis and are likely to generate excess risk-adjusted returns during the next five years, according to Hotel Investment Strategies. However, 49% of the markets are overpriced. About 23% are fairly priced and expected to generate returns commensurate with their risk. Hotel Investment Strategies stated that many hotel investors have been able create superior risk-adjusted returns because of the inefficient hotel pricing market.
