U.S. Hotel Buyers Outnumber Sellers 5:2

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. October 14, 2008

SEPTEMBER 13, 2006. Jones Lang LaSalle Hotels' latest Hotel Investor Sentiment Survey (HISS), reports that the strong appetite for hotel ownership persists, as aspiring buyers outnumber potential sellers approximately 5:2.

Almost half, or 45.9%, of investors intend to buy, exemplifying the overriding buy intention on 21 of the 26 markets surveyed. Although the buy sentiment still dominates the Americas' hotel investment market, it has softened since the last survey by 16.5 percentage points, reflective of both the increased asset values and the lack of quality assets available.

'Across the Americas, the low yield environment over the last two years has been sustained, with cap rates softening by a mere 10 basis points over the course of the last six months to 8.5%. Similarly, IRRs increased by 50 basis points, with 19.0% representing the average trigger motivating investors' new acquisitions,' said Arthur Adler, managing director and CEO-Americas for Jones Lang LaSalle Hotels.

'The sell ranking is at its highest level since the inception of this survey in July 2000, reaching 18.9% as investors attempt to take advantage of the capital appreciation over the last several years and the continuing favorable pricing environment,' said Kristina Paider, senior vice president of research and marketing for Jones Lang LaSalle Hotels. This increase has helped to fulfill the overwhelming number of interested buyers, triggering a more active transaction market.

Consequently, during the first six months of 2006, U.S. hotel transaction volume reached $21 billion, which alone surpasses that of full year 2005 volume. Nonetheless, steep competition will persist and investors will continue to be constrained by a lack of available product, as evidenced in the large discrepancy that still exists between investors interested in buying and selling. Hawaii has the largest discrepancy between the proportion of investors interested in implementing a buy versus sell strategy, representing the elevated level of competition in this market.

At least 53% of survey respondents indicated a desire to buy in Hawaii, Los Angeles, Washington, D.C., Vancouver, San Francisco, New York, Chicago, and the Pacific Northwest. Investors are keen to gain a foothold in these markets, which are expected to yield strong performance. Among these perennial favorites, Vancouver is a new entrant to the top 'buy' rated markets, which is attributable in part to its host role in the 2010 Winter Olympics.

Investor intentions to develop new assets have gathered pace, intensifying since the last survey. Despite the increase, it still remains the least favored strategy, accounting for only 10.8% of investors' intentions, with the cost of construction in many markets still exceeding replacement costs. With new projects often taking two to three years to complete, organic growth is expected to remain benign for the next several years. Buenos Aires (27.6%), the Caribbean (23.4%), and Mexico City (21.2%) represent the strongest development candidates, given that such locations outside U.S. borders are experiencing increasing demand spurred by a strong U.S. economy.

The HISS survey, which targets the world's 2,000 largest investors and owners of tourism properties, is the only global survey of its kind.

To receive a copy of Jones Lang LaSalle Hotels' full research report, Hotel Investor Sentiment Survey, visit www.joneslanglasallehotels.com or www.jllhss.com.