• Buying in a bear market

The next few years are being heralded as one of the greatest buying opportunities ever. Owners group HOFTEL headlined its latest newsletter as "the greatest hotel investment opportunity".

But despite most hospitality executives describing their outlook in Europe as bearish, according to a survey by law firm DLA Piper, bargains remain thin on the ground as hotel property owners cling on rather than sell.

The DLA Piper 2009 Europe Hospitality Outlook Survey found 84% of 261 respondents stating that their 12-month outlook was bearish and 58% do not expect a rebound until 2011 or after.

The main cause of the woe is lack of liquidity (43%) with a third blaming the economy. Yet despite this lack of liquidity, 82% think there are good buying opportunities for well capitalised investors (the level of equity was not specified).

Much of this might be expected. But at the press conference announcing the survey, DLA's lawyers said that the biggest upsurge in work was coming from reviewing non disturbance agreements on behalf of operators. This shows that tenants are increasingly worrying about the financial health of their landlords.

In other commercial property sectors, particularly retail, this is usually the other way round. Suffering tenants are deemed likely to create a problem for landlords. Retailers have been particularly vocal in calling for more lenient payment terms from landlords.

The fact that some hotel owners are now requesting concessions from their hotel operating company tenants shows that the balance of power in the owner-operator relationship still has a way to go to match other property sectors.

The emergence of more forceful and professional owners should lead to a more realistic approach to selling.

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