Is the medium-term outlook for hotels still relatively favourable?

We continue to believe that IPD hotel total returns will be worse than the all-property average in 2009. However, in recognition of the changed economic circumstances, by contrast with what we predicted when we first looked closely at the hotel sector in April last year, hotels are unlikely to revert to their historically typical outperformance over the medium-term. Our forecast is that IPD hotel total returns will average 8%y/y over 2010-2013, only in line with the all-property average.