Moody’s: Hotel Prices Keep Up with Apartment Prices

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Compared to the first recovery years, full-service hotel prices are increasing at roughly the same pace as apartment prices, according to Moodys.

The index shows full-service hotel prices increased 52.3% since the fourth quarter of 2009, only 3% less than the 55.3% increase in apartment prices.

The increase is significant since in the 12 months ending in May, apartment prices rose 12.9%, which is more than triple the 3.4% rise in core commercial property asset prices, analysts note.

At least over the near term prices are expected to remain flat or decline due to improvements in occupancy rates and rents resulting from rising employment will lag the drag on value resulting from higher borrowing costs,” said Moody’s director of commercial real estate research, Tad Philipp.

The recovery of the hotel industry, however, is not uniform since Moodys RCA CPPI also shows limited-service hotel prices lag behind the strong recovery of the full-service hotel prices.

While limited-service hotel prices have increased 9% since the third quarter of 2010, they remain below their fourth-quarter 2009 level.

Retail was the only core commercial sector reporting price increases month-over-month, over the previous three-month and 12-month periods.

Moodys analysts also find the major markets have greatly outperformed the non-major markets, compared to the January 2010 national all-property composite price trough.

In May the national all-property composite index decreased by 0.6%, both of its two major components changed slightly, but in opposite directions.

The apartment index, which constitutes 28% of the composite, increased by 1.3%, while the core commercial component, which constitutes 72% of the national composite, decreased by 1.3%.

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