MINEOLA, NY? HVS International has unveiled its findings from its 1998 Hotel Valuation Index (HVI), an annual report that examines hotel value trends in 46 U.S. market cities, as well as the country as a whole. On average, U.S. hotel rooms in 1998 had a value of $69,000 apiece, up $200 over the previous year. New York?s hotels had the highest room values, at $318,000. That was an increase of $38,500 over the year before, thanks to high occupancy and high average rates in New York, along with a low cap rate. San Francisco hotel rooms were valued the second highest in the country, at $235,000. Oahu was third, at $172,000.Long Island, NY, hotel rooms increased in value by 41% in 1998. That was because the area had a low level of supply growth, but at the same time saw increases in room rates and occupancy rates. The number of markets showing a loss of value in 1998 shot up to 22 in 1998 from three in 1997. That occurred for two reasons, said Gretchen Peterson, senior associate for HVS International, who co-authored the HVI report with Steve Rushmore, HVS president and founder. There was an oversupply in some markets, causing an imbalance of supply and demand. Then there was the decline of the stock market last fall. ?So the market changed dramatically,? said Peterson. The report recommended that investors looking to buy properties should consider purchasing in markets where the values per room are still low, and where the HVI projects that hotel values will grow over the next four years, like Tampa and Houston. Markets recommended to build in are New York, San Diego, Long Island and Los Angeles, according to the report. They are considered hot spots because the values per room are too high to acquire under the local replacement cost, but the HVI projects values to increase there over the next four years. Where to sell? The HVI projects a rapid decline in value in Cincinnati, Phoenix, Tucson, Pittsburgh and Albuquerque. And while its projected the value of a typical room in New York City will rise by over $146,000 between 1998 and 2002, the HVI predicts a drop in value in Phoenix, Tucson, Seattle, Dallas and Cleveland, due to pending overbuilding. Overall, the typical United States hotel will see a rise in value of $16,000 over the next four years, according to the HVI.
