Investors seek new opportunities in the hotel sector in 2005

Three months into 2005 and the hotel industry has a real spring in its step courtesy of some high-profile deal making and a resurgence in trading.
At this year's International Hotel Investment Forum (IHIF) in Berlin, delegates were predicting at least two years of good trading and no end in sight to investors' appetite for hotel assets.
On the eve of the conference, Hilton announced it had concluded terms on the sale of its 11 provincial hotels in the UK. This was preceded by news from InterContinental Hotel Group that it had offloaded its 73 hotels to a consortium of asset managers headed by Lehman Brothers.
As well as the conclusion of these two high-profile deals, there's the announcement from Whitbread that it plans to sell off its Marriot portfolio in the UK.
The hotel industry believes the deal activity won't end there. Jag Singh, joint finance director at Marylebone Warwick Balfour (MWB), said the sector had been buzzing for the past six to nine months. "There is interest in driving the hotel sector forward through acquisition and I think there are quite a few deals happening right now," he said.
David Andrews, director at Lioncourt Capital, agreed that the sector was brimming with confidence, and that operators had good reason to believe that their bottom-line figures would improve in the coming year.
There was plenty of speculation that more deals were to follow, with industry observers expecting some sales of the old Queens Moat House stock - and possibly some fall-out from the sale of the 73 InterContinental hotels bought by Lehmans.
Industry consultant Melvin Gold said that splitting up the big deals into smaller tranches of hotels was likely. "Whitbread will be a big deal and it wouldn't surprise me if it sells its Marriott hotels in two or three different chunks," he said.
Gold also pointed out that with the UK's current low interest rates and inflation, the sector seemed set to remain an attractive proposition for investors.
"There is a lot of money trying to find a home in the hotel sector and it could be an active year - arguably it could be a very active two years," he concluded.

CAPTION: There was a positive mood at last week's conference in Berlin