Hotel Investor Sentiment Survey (HISS)
Hotel Investor Sentiment Survey (HISS) Issue 1 September 2000
GLOBAL REVIEW The weight of sentiment is generally positive and portfolio expansion is intended. Trading expectations are improving, yields are expected to rise, markets are generally in an upturn phase with some exceptions and there is a healthy market with stronger active intentions.
TRADING PERFORMANCE The European region had the most positive outlook for both short and medium term performance, when compared to the Americas and Asia Pacific. However, the Asia Pacific had the strongest growth in performance expectations in the medium term, with the South East Asian and Australasian markets contributing most to this strengthening. The Spanish and German markets led the way in Europe's strong future performance sentiment, while in the Americas key urban gateway cities such as San Francisco and Los Angeles were considered to have the most positive outlook.
Trading Performance Expectations^
Investment Yields^ IRR for New Cap Rate Growth Acquisition for New Expectation (%) Acquisition (%) (Basis Points) Americas Asia Pacific Europe GLOBAL
15.1 15.7 14.0 14.9
11.1 10.2 8.8 10.0
399 553 526 493
Short Term Cap Rate Trend* Higher (20.1%) Neutral/Higher (6.1%) Higher (15.6%) Higher (14.7%)
^Rate on unleveraged, all cash transactions; weighted by number of responses *Net Balance indicated in brackets IRR = Internal Rate of Return Cap Rate = Initial Yield Growth Expectation = difference between Cap Rate and IRR
Source: Jones Lang LaSalle Hotels' HISS
MARKET CYCLE The Global hotel market appears to be in the early upturn stage confirmed by the positive income growth expectations and the minority Sell intention. With stronger mid term trading conditions compared to the short term, market strength is expected to gather pace, pushed predominantly by the Asia Pacific markets.
INVESTMENT INTENTIONS It appears investors around the world are keenly interested in expanding their portfolio of hotel and resort assets, with a strong 46.7% buy option. Marginally over half the investors want to expand their portfolios. This was followed by a hold option at 31.2%. Europe is the global hot spot with over two thirds of investors wanting to expand their portfolios and although there are sellers in most markets, Europe has the lowest regional proportion suggesting competitive investment market conditions prevail. It is not surprising Europe has the highest proportion of respondents intending to build.
INVESTMENT YIELDS Investors in Europe are willing to accept lower yield profiles (a fact we all knew but now proven statistically) confirming their strong income growth expectations and competitive investment market (as evidenced by the strong buy intention). Investors in the Americas seek the highest initial return on investment as their income growth is expected to be the lowest measured by the difference between the Initial yield and IRR requirements. Asia Pacific investors are demanding a higher reward for their investment. While they are willing to accept relatively competitive initial yields in many markets, their higher IRR expectations are supported by their anticipation of stronger income growth.
Asia Pacific in the most part has overcome its obsession with development (except in selective markets where some opportunity is being considered) and investors are showing the strongest hold option of the three regions (at 52.1%). The Americas is the most active market with the largest spread over the Sell and Buy/Build options. They have the highest sell option of the three regions (at 15.7%).
Investment Intentions in the Short Term^
The short term cap rate trend across all global markets confirms the positive sentiment expressed in trading performance ie. the majority of investors expect initial yields to rise. The rise in this cap rate expectation will translate to slower value growth than that of income growth. The higher increasing cap rate trend in the Americas compared to the other regions is confirmed by their lower growth expectations. 1
Europe
EUROPE
INVESTMENT YIELDS
Investors are extremely positive about the region. Trading performance is positive for all but one market in the short term and firmly positive in the medium term. Reflective of this outlook, most European markets are considered to be in an upturn phase. They also have a strong buy sentiment attached, with Munich ranking as the most sought after city.
Growth and security are the two striking conclusions to the analysis of yield expectations. Competitive investment pressures and wide acknowledgment of continued income growth see European yields lower than elsewhere across the globe.
TRADING PERFORMANCE
Throughout the region, the median initial yields required were all below double digits with the exception of the oversupplied Birmingham market and the emerging Prague market. German initial yields were by far the lowest in the region reflecting the influence of the tax advantaged property funds on the overall property investment market. The lower quartile yields highlight the potentially strong competition investors are likely to face when prime assets come to the market in the most sought after European locations of Berlin, Milan, Paris and Frankfurt.
The European hotel markets are generally considered to have a strong positive trading performance outlook in the short to medium term. In the short term, all markets had a positive net balance, with the exception of Birmingham where new supply is currently impacting trading. The key Spanish (Madrid, Barcelona) and German (Frankfurt, Munich) markets have a very strong trading performance sentiment over this period.
Income growth measured by the difference between the initial yield and unleveraged IRR expectation shows a substantial 526 basis points. Again this is diluted by the German average of 350 basis points, which, if excluded shows a substantial average of 590 basis points across the other 11 European markets headed by Paris, Madrid, Milan, Amsterdam and Barcelona.
The primary investment focus of respondents was clearly first class hotels (76.6% of investors) with deluxe/boutique hotels also popular at 40.4%. The next favoured investment type was tourist class hotels (27.7%), followed by deluxe/boutique resorts (14.9%) and first class resorts(12.8%). Tourist class resorts were ranked by only 6.4%.
Medium term, the top performing markets are again expected to be in Germany (Berlin, Munich, Frankfurt) and Spain, along with Amsterdam and Paris. Given the extremely positive short term trading outlook it is not surprising that respondents concluded the medium term outlook was likely to be somewhat less positive. Key markets that fall into this category include Milan, Hamburg and Frankfurt, yet the latter still remains very positive. In spite of a less bullish sentiment in performance for ten markets, all 15 are still expected to record positive trading performance in the medium term. Trading Performance Expectations
Not surprisingly there was an expectation for initial yields to remain firm or to increase for those markets where income growth continues to be strong and maturity in the cycle approaches.
Birmingham Edinburgh London Barcelona Madrid Berlin Frankfurt Hamburg Munich Milan Rome Amsterdam Brussels Paris Prague
IRR for New Acquisition (%) Lower Upper Quartile Quartile 14.5 15.5 11.8 16.5 10.0 15.0 11.0 16.5 9.0 16.5 8.0 15.0 8.0 15.0 8.1 14.3 7.8 13.5 11.0 17.0 10.5 16.5 12.0 15.0 12.3 15.5 9.8 17.0 14.0 20.0
IRR = Internal Rate of Return Rate on unleveraged, all cash transactions Source: Jones Lang LaSalle Hotels' HISS
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Jones Lang LaSalle Hotels’ HISS
Median 15.0 15.0 14.0 15.0 15.0 11.0 12.0 11.5 11.0 15.0 15.0 15.0 15.0 15.0 16.0
Europe
Cap Rate (Initial Yield) for New Acquisition (%) Lower Upper Median Short Term Quartile Quartile Cap Rate Trend^ Birmingham Edinburgh London Barcelona Madrid Berlin Hamburg Frankfurt Munich Milan Rome Amsterdam Brussels Paris Prague
8.3 7.8 7.1 7.6 7.0 6.1 7.0 6.5 7.0 6.4 7.3 7.1 7.9 6.5 8.0
12.0 11.4 11.8 10.3 10.0 10.0 10.0 10.0 10.0 10.3 10.6 10.0 10.3 10.0 12.0
11.0 9.5 9.3 8.8 8.3 8.0 8.0 7.5 8.0 8.5 9.0 8.5 9.3 8.0 10.0
Higher (37.5%) Higher (25.0%) Higher (25.9%) Higher (25.0%) Higher (31.3%) Neutral/Higher (15.4%) Higher (23.1%) Neutral/Lower (-7.1%) Neutral/Higher (8.3%) Neutral (0.0%) Neutral (0.0%) Higher (20.0% Neutral/Higher (16.7%) Neutral/Lower (-7.1%) Neutral/Higher (9.1%)
Rate on unleveraged, all cash transactions ^Net Balance indicated in brackets Source: Jones Lang LaSalle Hotels' HISS
MARKET CYCLE Most markets in Europe were considered to be in the early upturn stage of the cycle. London and Amsterdam were placed in the late upturn stage with the Spanish markets of Madrid and Barcelona approaching that level. This is in line with the pattern of economic recovery across Europe where the United Kingdom led the way, followed by the Netherlands and then the periphery countries, including Spain. The European core of Germany and France was the last to enter the recovery phase and it is the markets in these countries along with the Italian markets surveyed that are perceived to be in the early upturn stage.
INVESTMENT INTENTIONS Consistent with this positive outlook on the trading position, investor sentiment is very much focused on acquisition, with 42.8% of investors seeking to buy assets. Munich clearly stood out as the market most sought after by the respondents. Other locations attracting considerable "buy" interest were Paris, Rome, Madrid, Milan and Berlin. Those markets attracting the most interest in new development were Barcelona, Edinburgh, Frankfurt and Berlin. London and Amsterdam ranked high with investors as locations in which to hold assets, reflecting their current excellent trading performance. The generally high proportion of investors intending to acquire hotels across Europe is a clear reflection of the considerable difficulties faced by those wishing to develop hotels. Lack of available sites, tough competition from alternative uses and generally restrictive planning regulations all act as a brake on new development. Furthermore, once investors have secured a position in these key markets that are so difficult to enter, they tend to be long term holders of assets - again confirmed by the survey. The significant mismatch between the high buying demand and minimal selling intention would suggest that there would be strong competition for the few assets that are likely to come to the market. This all goes well for those asset owners thinking of exiting in the near future.
Investment Intentions in the Short Term
Most respondents categorised Edinburgh in the late upturn stage, but a significant minority considered it to be in a trough, confirming that recent new supply has impacted certain market sectors. The picture for Birmingham was very mixed with option almost equally divided between early downturn, early upturn and late upturn. This suggests that recent new supply is having a variable impact on different sectors of the market. Hotel Market Cycle
Source: Jones Lang LaSalle Hotels’ HISS
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Americas
AMERICAS
INVESTMENT YIELDS
Investors anticipate moderately positive trading performance for the Americas over the short to medium term, with San Fransisco, Los Angeles and Boston considered hot markets. Yields are expected to rise as income grows in these major maturing markets. Most respondents favored large, "gateway" urban markets over secondary cities.
The markets with the strongest trading expectations (headed by New York and San Francisco) top the list of American cities with the lowest initial yield and IRR requirements and the most sought-after venues to invest. Atlanta, Dallas, and Phoenix are buyer's markets, with the highest capitalization rates and internal rates of return.
Reflecting the desire to be in product with high barriers to entry, more than half of the respondents sought First Class or Deluxe Hotels as the preferred investment (75.4% and 44.6% respectively). This was followed by Deluxe/Boutique Resorts (30.8%) and Tourist class Hotels and Resorts at 24.6% and 9.2% respectively.
TRADING PERFORMANCE (OCCUPANY & ADR) A reasonably positive sentiment exists for trading performance throughout the Americas in the short term, with this opinion strengthening slightly in the medium term. Key performers in the short term include Boston, New York, San Francisco and Washington. Within these markets, increases in demand and continuing supply constraints will keep upward pressure on rate and occupancy. The weight of opinion for Phoenix, Dallas, the Caribbean and Atlanta is for these markets to trend downwards over the short term. In the medium term, investors are expecting continued erosion of trading fundamentals in Phoenix and Dallas, due to easier development controls and availability of sites. Hot markets in the medium term include San Francisco and Los Angeles, with strong expectations in New York, Boston, Washington and Central/South America. Opinion is divided on the performance of Atlanta with a slight sway towards the positive. The Caribbean and Orlando are improving markets going forward. Trading Performance Expectations
Some investors expected cap and discount rates well below the lower quartile particularly in New York. The market for acquisition is also expected to become easier and initial yields to increase for all markets except Boston. In general terms, values should remain firm in this and the major urban markets provided the income growth is proportionately greater than the yield swing. Yields in the Caribbean are expected to increase substantially in order to attract new investment. Intense investor demand will keep yields from rising excessively in San Francisco and New York. The average median initial yield was 11.1% for the region which infers some 400 basis points growth referenced to the unleveraged IRR expectations. Individual markets that demonstrated above average growth by the same measure included the majority of the strong trading cities and those in the upturn of the cycle including Boston, Chicago, Hawaii, Los Angeles, San Francisco and Washington DC.
IRR for New Acquisition (%) Lower Upper Quartile Quartile Atlanta 13.8 18.5 Boston 12.0 16.0 Chicago 13.0 18.0 Dallas 14.0 18.5 Hawaii 12.0 18.0 Los Angeles 13.0 18.0 Miami 13.0 18.0 New York 12.0 16.3 Orlando 13.0 18.0 Phoenix 13.3 18.8 San Francisco 12.0 16.8 Washington, D.C. 12.0 16.0 Canada^ 13.0 18.0 Caribbean 14.0 19.0 Central/Sth America* 14.0 20.0 IRR = Internal Rate of Return Rate on unleveraged, all cash transactions *Mexico City, Sao Paulo, Rio de Janeiro, Buenos Aires ^Montreal,Toronto, Vancouver Source: Jones Lang LaSalle Hotels' HISS
^
4
Median 15.0 15.0 15.0 15.0 15.0 15.0 15.0 14.0 15.0 15.0 14.5 15.0 15.0 16.0 16.5
Americas
Cap Rate (Initial Yield) for New Acquisition (%) Lower Upper Median Short Term Quartile Quartile Cap Rate Trend” Atlanta Boston Chicago Dallas Hawaii Los Angeles Miami New York Orlando Phoenix San Francisco Washington, D.C. Canada^ Caribbean Cntrl/Sth America*
10.0 9.3 10.0 10.0 10.0 9.0 10.0 9.0 10.0 10.0 9.0 9.5 10.0 10.5 10.3
12.4 12.0 12.0 14.0 12.0 12.0 12.0 12.0 14.0 14.0 12.0 12.0 13.0 14.0 15.0
11.0 10.5 10.5 11.5 10.5 10.5 11.0 10.0 12.0 12.0 10.0 10.6 11.5 12.0 12.5
Higher (40.9%) Neutral (-3.3%) Neutral/Higher (16.7%) Higher (33.3%) Neutral/Higher (20.0%) Neutral/Higher (18.2%) Higher (31.8%) Neutral/Higher (9.7%) Higher (28.0%) Higher (29.0%) Neutral (2.9%) Neutral/Higher (17.9%) Neutral/Higher (12.5%) Higher (47.4%) Neutral/Higher (16.7%)
INVESTMENT INTENTIONS On average, investors in the Americas favor a buy sentiment as ranked by 45.1% of all respondents. Strong buy markets included Hawaii and Los Angeles, certainly good news for Japanese owners looking to divest their quality assets. Investors also see buying opportunity in Canada, the Caribbean, and South America, in spite of risks in the latter two regions. Selling sentiment is strongest in Dallas, Miami, Orlando and Phoenix, the markets at the crest or on the downturn trend.
Investment Intentions in the Short Term
Rate on unleveraged, all cash transactions *Mexico City, Sao Paulo, Rio de Janeiro, Buenos Aires ^Montreal,Toronto, Vancouver "Net Balance indicated in brackets Source: Jones Lang LaSalle Hotels' HISS
MARKET CYCLE Wide variation of opinion within markets was particularly noticeable in some instances. With reference to the Trading Expectations we can expect Orlando to remain stationary as sentiment is marginally weighted to the positive, Dallas and Phoenix to continue to slide while the Caribbean may bounce a little quicker. Atlanta is expected to remain stationary with divided opinion about its future direction while the urban centres in upturn markets will continue to grow. Chicago is likely to hover at the peak as opinion going forward is still weighted to the positive. Miami is the market that contradicts its position on the cycle as investor's opinion was widely divided. While some saw its position as rising, equally others saw it as having peaked. Hotel Market Cycle
,
Source: Jones Lang LaSalle Hotels’ HISS
5
Asia Pacific
ASIA PACIFIC
INVESTMENT YIELDS
Many Asian markets are starting to roar again as investors indicate tremendous positive sentiment for trading performance. Investors are willing to accept competitive yields in many markets but demand reward for their risk through higher IRRs. On average, investor sentiment indicates the Asia Pacific markets are on the early upturn of the market cycle. Strong buy sentiment exists in many of the Asian markets with Bali and Tokyo the stand-out cities at 100% and 90% buy votes respectively.
While many investors demonstrated a willingness to accept competitive initial yields in many markets, they demanded substantial reward and expected comparatively high income growth to satisfy their IRR requirement. Initial yield expectations were lowest in the tightly held or actively sought after Asian markets, namely Hong Kong, Tokyo, Singapore and Seoul. The highest rates of return were being demanded from the less transparent markets of Bali, Jakarta, Beijing, Mumbai and again from Seoul.
Investors responding to this survey were mainly interested in First class hotels (66.1%), followed by Deluxe/Boutique Hotels (43.5%), First class resorts (38.7%), Tourist class hotels (29.0%), Deluxe/Boutique Resorts (19.4%) and Tourist Class Resorts (17.7%).
The Australiasian markets offered reasonable growth, as measured by the difference between initial yield and unleveraged IRR at 400 basis points. The major commercial markets of Asia each offer income growth potential at an average of 392 basis points which is subdued by their tightly held or competitive investment intentions. The yield differential at an average of 672 basis points in the 1990's tiger economies and emerging markets is a reflection of: expected strong growth in markets such as Bali, Phuket, Seoul, Bangkok and Beijing; risk in the poorly performing Jakarta and Kuala Lumpur markets; and uncertainty in Mumbi.
TRADING PERFORMANCE The Asian recovery is well on the way although some short term pain is expected in Jakarta, Kuala Lumpur, Auckland and to a lesser extent the Gold Coast. The hot markets are currently Bangkok, Hong Kong, Phuket, Seoul and Singapore. Add to this Bali and Beijing in the medium term. Eleven of the 15 markets showed a trend toward stronger trading conditions in the medium term over the short term sentiment. The most noticeable exception was Sydney which had a strong short term performance expectation, but was still positive in the medium term. Over the medium term, the market expecting the biggest bounce is predicted to be Jakarta reflecting a disastrous short term outlook recovering to marginally positive in the medium term. Other markets in this category include Kuala Lumpur, Auckland and the Gold Coast. Trading Performance Expectations
Auckland Gold Coast Melbourne Sydney Bangkok Bali Jakarta Kuala Lumpur Phuket Singapore Beijing Hong Kong Seoul Tokyo Mumbai
IRR for New Acquisition (%) Lower Upper Quartile Quartile 12.3 18.8 14.0 19.5 12.0 14.6 11.0 15.8 12.6 20.0 15.0 20.0 15.0 25.0 12.6 20.0 13.0 19.5 10.0 14.6 17.3 25.6 10.0 14.6 14.3 17.9 12.0 15.0 15.3 21.3
IRR = Internal rate of return Rate on unleveraged, all cash transactions Source: Jones Lang LaSalle Hotels' HISS
Jones Lang LaSalle Hotels’ HISS
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Median 14.5 15.0 13.0 15.0 15.0 20.0 22.0 15.0 15.0 12.5 20.8 12.0 16.0 13.0 16.8
Asia Pacific
Cap Rate (Initial Yield) for New Acquisition (%) Lower Upper Median Short Term Quartile Quartile Cap Rate Trend* Auckland Gold Coast Melbourne Sydney Bangkok Bali Jakarta Kuala Lumpur Phuket Singapore Beijing Hong Kong Seoul Tokyo Mumbai
10.0 10.0 8.6 8.5 9.3 10.0 11.1 9.1 10.0 7.1 11.0 7.6 9.1 8.0 10.0
11.4 11.0 10.8 10.0 11.0 14.5 17.9 12.9 12.0 8.9 13.0 10.0 10.8 10.0 13.6
10.0 10.0 10.0 10.0 10.0 10.5 12.8 10.8 10.0 8.0 11.5 8.8 9.8 9.0 11.5
Higher (35.7%) Neutral/Higher(15.0%) Higher (22.2%) Neutral (0.0%) Neutral/Higher (8.3%) Neutral (0.0%) Higher (31.3%) Neutral/Higher (9.1%) Neutral/Lower(-18.8%) Neutral/Lower(-19.0%) Higher (33.3%) Neutral/Lower(-5.3%) Neutral/Lower(-10.0%) Neutral (0.0%) Neutral/Lower(-16.7%)
Rate on unleveraged, all cash transactions * Net Balance indicated in brackets Source: Jones Lang LaSalle Hotels' HISS
MARKET CYCLE The Asia Pacific hotel and resort sector is considered to be bottoming out with many of the major markets in an upturn phase of the market cycle. The majority of the South East Asian markets are either in a trough or early upturn reflecting sentiment expressed in short term trading performance expectations in these markets. The exception is Phuket, which has performed very strongly since 1998 and in turn investor interest has remained buoyant.
INVESTMENT INTENTIONS A definite buy sentiment exists throughout the Asia Pacific, with few investors interested in building or in fact selling. A mixed response between the South East Asian markets reflects the various stages of recovery for each city. Bali is the "hot-spot" with a 100% buy sentiment. Within Bali and Bangkok, investor sentiment is a case of "get some of the action if you can", however competition will be strong as competitive yields will have to be accepted in the short term. Phuket and Singapore are also solid buy markets, while in Jakarta investors can expect the buy momentum to increase as performance improves and the political/economic situation further stabilises. The North Asian markets are more tightly held and as such strong buy sentiment exists. Most investors want a piece of the Tokyo market and to trade in this safe house will be competitive. The same situation exists in Seoul with the few properties that have been traded being hotly contested. Within Hong Kong strong positive sentiment exists but growth is not outstanding. Based on investment sentiment and performance indicators, to buy or build in Mumbai shows a deal of faith in the longer term. Sellers in this market should expect a deep discount. Within Australasia, the strongest sentiment is to hold hotel assets, with Sydney having the highest buy option at 44.8%. Very little emphasis is on the build option in view of the market's recent supply additions.
Investment Intentions in the Short Term
The North Asian markets, excluding Seoul, are also in an early upturn phase. It is apparent that investors recognise hotel performance in Seoul has been relatively strong and less affected than other neighbouring markets by the Asian financial crisis. Australasia's markets are considered to be in a trough, reflective of the recent wave of new supply. However, Sydney is perceived to be at the late upturn stage due to the removal of the bed tax and the Olympic Games which serve as positive counters to supply increases. Notably, the majority of respondents maintain a positive outlook for Sydney after the Olympics. Hotel Market Cycle
Source: Jones Lang LaSalle Hotels’ HISS
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Hotel Investor Sentiment Survey (HISS) Issue 1 September 2000
ABOUT THE SURVEY This report presents the inaugural results of Jones Lang LaSalle Hotels' HISS (Hotel Investor Sentiment Survey) - a world first. This exclusive survey identifies the weight of opinion of future trends and also establishes a benchmark position on a number of key issues from which future trends can be considered. Jones Lang LaSalle Hotels' HISS is targeted at the world's 800 largest investors and/or owners of hotel/resort properties. An overall response rate across all three regions of 23.2% was achieved. The following table details the primary investment vehicle structure of these investors.
size of the market or the respondent. Therefore results do not necessarily represent the volume or value of capital flow. In addition, the cities are currently not weighted by size of market ie. number of investment grade rooms. Weighting is currently only conducted for the regional and global averages and these are done based on the number of responses for each city and question.
DEDICATED HOTEL OFFICES New York 153 E. 53rd Street New York 10022 tel: +1 212 812 5700 fax: +1 212 421 5640
Primary Investment Vehicle Direct Sole Ownership Unlisted Fund, Syndicate, Trust or Partnership Publicly Listed Fund Publicly Listed Corporate
Americas Asia Pacific Europe 39.1% 47.5% 46.8% 45.3% 3.1% 12.5%
23.0% 11.5% 18.0%
36.2% 4.3% 12.8%
GLOBAL 44.2% 34.9% 6.4% 14.5%
As the HISS is directed only at investors it does not include advisors or analysts who have assessed or advise what yield levels are required to consummate a transaction. The HISS yields are those that investors seek and as they are the median response, this therefore confirms the premise that yields required to successfully secure an investment will be lower than the HISS median and even the lower quartile. Accordingly, the HISS yields should not be applied in any valuation or appraisal assignment.
TECHNICAL NOTES Definition of Net Balance Net Balance is a representation of the weight of opinion. It is the percentage of respondents who respond positively minus the percentage of respondents who respond negatively. The maximum score of + or - 100% indicates that all respondents have given a positive or negative response respectively. A score of 0% indicates the same number of positive or negative responses to a particular question. Median and Quartiles The median response is used for yield analysis limiting the effect of outliers on the mean. The upper and lower quartile returns are provided so that investors may judge their response against the weight of opinion. The lower quartile is the median of the lower half of replies, while the upper quartile is the median of the higher half of replies. Market Cycle Assessment The most common response was chosen to represent the weight of opinion, with its position on the cycle pushed towards the direction of the highest response either side of the dominant choice.
8
Weighting of Responses Results are averaged across all respondents and are not weighted by
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Paris
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DISCLAIMER COPYRIGHT All material in this publication is the property of Jones Lang LaSalle Hotels (NSW) Pty Limited (ABN 65 075 217 462). No part of this publication may be reproduced or copied without written permission. While care has been taken in its preparation, no representation is not made nor responsibility accepted for the accuracy of the whole or any of its parts.
GLOBAL REVIEW The weight of sentiment is generally positive and portfolio expansion is intended. Trading expectations are improving, yields are expected to rise, markets are generally in an upturn phase with some exceptions and there is a healthy market with stronger active intentions.
TRADING PERFORMANCE The European region had the most positive outlook for both short and medium term performance, when compared to the Americas and Asia Pacific. However, the Asia Pacific had the strongest growth in performance expectations in the medium term, with the South East Asian and Australasian markets contributing most to this strengthening. The Spanish and German markets led the way in Europe's strong future performance sentiment, while in the Americas key urban gateway cities such as San Francisco and Los Angeles were considered to have the most positive outlook.
Trading Performance Expectations^
Investment Yields^ IRR for New Cap Rate Growth Acquisition for New Expectation (%) Acquisition (%) (Basis Points) Americas Asia Pacific Europe GLOBAL
15.1 15.7 14.0 14.9
11.1 10.2 8.8 10.0
399 553 526 493
Short Term Cap Rate Trend* Higher (20.1%) Neutral/Higher (6.1%) Higher (15.6%) Higher (14.7%)
^Rate on unleveraged, all cash transactions; weighted by number of responses *Net Balance indicated in brackets IRR = Internal Rate of Return Cap Rate = Initial Yield Growth Expectation = difference between Cap Rate and IRR
Source: Jones Lang LaSalle Hotels' HISS
MARKET CYCLE The Global hotel market appears to be in the early upturn stage confirmed by the positive income growth expectations and the minority Sell intention. With stronger mid term trading conditions compared to the short term, market strength is expected to gather pace, pushed predominantly by the Asia Pacific markets.
INVESTMENT INTENTIONS It appears investors around the world are keenly interested in expanding their portfolio of hotel and resort assets, with a strong 46.7% buy option. Marginally over half the investors want to expand their portfolios. This was followed by a hold option at 31.2%. Europe is the global hot spot with over two thirds of investors wanting to expand their portfolios and although there are sellers in most markets, Europe has the lowest regional proportion suggesting competitive investment market conditions prevail. It is not surprising Europe has the highest proportion of respondents intending to build.
INVESTMENT YIELDS Investors in Europe are willing to accept lower yield profiles (a fact we all knew but now proven statistically) confirming their strong income growth expectations and competitive investment market (as evidenced by the strong buy intention). Investors in the Americas seek the highest initial return on investment as their income growth is expected to be the lowest measured by the difference between the Initial yield and IRR requirements. Asia Pacific investors are demanding a higher reward for their investment. While they are willing to accept relatively competitive initial yields in many markets, their higher IRR expectations are supported by their anticipation of stronger income growth.
Asia Pacific in the most part has overcome its obsession with development (except in selective markets where some opportunity is being considered) and investors are showing the strongest hold option of the three regions (at 52.1%). The Americas is the most active market with the largest spread over the Sell and Buy/Build options. They have the highest sell option of the three regions (at 15.7%).
Investment Intentions in the Short Term^
The short term cap rate trend across all global markets confirms the positive sentiment expressed in trading performance ie. the majority of investors expect initial yields to rise. The rise in this cap rate expectation will translate to slower value growth than that of income growth. The higher increasing cap rate trend in the Americas compared to the other regions is confirmed by their lower growth expectations. 1
Europe
EUROPE
INVESTMENT YIELDS
Investors are extremely positive about the region. Trading performance is positive for all but one market in the short term and firmly positive in the medium term. Reflective of this outlook, most European markets are considered to be in an upturn phase. They also have a strong buy sentiment attached, with Munich ranking as the most sought after city.
Growth and security are the two striking conclusions to the analysis of yield expectations. Competitive investment pressures and wide acknowledgment of continued income growth see European yields lower than elsewhere across the globe.
TRADING PERFORMANCE
Throughout the region, the median initial yields required were all below double digits with the exception of the oversupplied Birmingham market and the emerging Prague market. German initial yields were by far the lowest in the region reflecting the influence of the tax advantaged property funds on the overall property investment market. The lower quartile yields highlight the potentially strong competition investors are likely to face when prime assets come to the market in the most sought after European locations of Berlin, Milan, Paris and Frankfurt.
The European hotel markets are generally considered to have a strong positive trading performance outlook in the short to medium term. In the short term, all markets had a positive net balance, with the exception of Birmingham where new supply is currently impacting trading. The key Spanish (Madrid, Barcelona) and German (Frankfurt, Munich) markets have a very strong trading performance sentiment over this period.
Income growth measured by the difference between the initial yield and unleveraged IRR expectation shows a substantial 526 basis points. Again this is diluted by the German average of 350 basis points, which, if excluded shows a substantial average of 590 basis points across the other 11 European markets headed by Paris, Madrid, Milan, Amsterdam and Barcelona.
The primary investment focus of respondents was clearly first class hotels (76.6% of investors) with deluxe/boutique hotels also popular at 40.4%. The next favoured investment type was tourist class hotels (27.7%), followed by deluxe/boutique resorts (14.9%) and first class resorts(12.8%). Tourist class resorts were ranked by only 6.4%.
Medium term, the top performing markets are again expected to be in Germany (Berlin, Munich, Frankfurt) and Spain, along with Amsterdam and Paris. Given the extremely positive short term trading outlook it is not surprising that respondents concluded the medium term outlook was likely to be somewhat less positive. Key markets that fall into this category include Milan, Hamburg and Frankfurt, yet the latter still remains very positive. In spite of a less bullish sentiment in performance for ten markets, all 15 are still expected to record positive trading performance in the medium term. Trading Performance Expectations
Not surprisingly there was an expectation for initial yields to remain firm or to increase for those markets where income growth continues to be strong and maturity in the cycle approaches.
Birmingham Edinburgh London Barcelona Madrid Berlin Frankfurt Hamburg Munich Milan Rome Amsterdam Brussels Paris Prague
IRR for New Acquisition (%) Lower Upper Quartile Quartile 14.5 15.5 11.8 16.5 10.0 15.0 11.0 16.5 9.0 16.5 8.0 15.0 8.0 15.0 8.1 14.3 7.8 13.5 11.0 17.0 10.5 16.5 12.0 15.0 12.3 15.5 9.8 17.0 14.0 20.0
IRR = Internal Rate of Return Rate on unleveraged, all cash transactions Source: Jones Lang LaSalle Hotels' HISS
2
Jones Lang LaSalle Hotels’ HISS
Median 15.0 15.0 14.0 15.0 15.0 11.0 12.0 11.5 11.0 15.0 15.0 15.0 15.0 15.0 16.0
Europe
Cap Rate (Initial Yield) for New Acquisition (%) Lower Upper Median Short Term Quartile Quartile Cap Rate Trend^ Birmingham Edinburgh London Barcelona Madrid Berlin Hamburg Frankfurt Munich Milan Rome Amsterdam Brussels Paris Prague
8.3 7.8 7.1 7.6 7.0 6.1 7.0 6.5 7.0 6.4 7.3 7.1 7.9 6.5 8.0
12.0 11.4 11.8 10.3 10.0 10.0 10.0 10.0 10.0 10.3 10.6 10.0 10.3 10.0 12.0
11.0 9.5 9.3 8.8 8.3 8.0 8.0 7.5 8.0 8.5 9.0 8.5 9.3 8.0 10.0
Higher (37.5%) Higher (25.0%) Higher (25.9%) Higher (25.0%) Higher (31.3%) Neutral/Higher (15.4%) Higher (23.1%) Neutral/Lower (-7.1%) Neutral/Higher (8.3%) Neutral (0.0%) Neutral (0.0%) Higher (20.0% Neutral/Higher (16.7%) Neutral/Lower (-7.1%) Neutral/Higher (9.1%)
Rate on unleveraged, all cash transactions ^Net Balance indicated in brackets Source: Jones Lang LaSalle Hotels' HISS
MARKET CYCLE Most markets in Europe were considered to be in the early upturn stage of the cycle. London and Amsterdam were placed in the late upturn stage with the Spanish markets of Madrid and Barcelona approaching that level. This is in line with the pattern of economic recovery across Europe where the United Kingdom led the way, followed by the Netherlands and then the periphery countries, including Spain. The European core of Germany and France was the last to enter the recovery phase and it is the markets in these countries along with the Italian markets surveyed that are perceived to be in the early upturn stage.
INVESTMENT INTENTIONS Consistent with this positive outlook on the trading position, investor sentiment is very much focused on acquisition, with 42.8% of investors seeking to buy assets. Munich clearly stood out as the market most sought after by the respondents. Other locations attracting considerable "buy" interest were Paris, Rome, Madrid, Milan and Berlin. Those markets attracting the most interest in new development were Barcelona, Edinburgh, Frankfurt and Berlin. London and Amsterdam ranked high with investors as locations in which to hold assets, reflecting their current excellent trading performance. The generally high proportion of investors intending to acquire hotels across Europe is a clear reflection of the considerable difficulties faced by those wishing to develop hotels. Lack of available sites, tough competition from alternative uses and generally restrictive planning regulations all act as a brake on new development. Furthermore, once investors have secured a position in these key markets that are so difficult to enter, they tend to be long term holders of assets - again confirmed by the survey. The significant mismatch between the high buying demand and minimal selling intention would suggest that there would be strong competition for the few assets that are likely to come to the market. This all goes well for those asset owners thinking of exiting in the near future.
Investment Intentions in the Short Term
Most respondents categorised Edinburgh in the late upturn stage, but a significant minority considered it to be in a trough, confirming that recent new supply has impacted certain market sectors. The picture for Birmingham was very mixed with option almost equally divided between early downturn, early upturn and late upturn. This suggests that recent new supply is having a variable impact on different sectors of the market. Hotel Market Cycle
Source: Jones Lang LaSalle Hotels’ HISS
3
Americas
AMERICAS
INVESTMENT YIELDS
Investors anticipate moderately positive trading performance for the Americas over the short to medium term, with San Fransisco, Los Angeles and Boston considered hot markets. Yields are expected to rise as income grows in these major maturing markets. Most respondents favored large, "gateway" urban markets over secondary cities.
The markets with the strongest trading expectations (headed by New York and San Francisco) top the list of American cities with the lowest initial yield and IRR requirements and the most sought-after venues to invest. Atlanta, Dallas, and Phoenix are buyer's markets, with the highest capitalization rates and internal rates of return.
Reflecting the desire to be in product with high barriers to entry, more than half of the respondents sought First Class or Deluxe Hotels as the preferred investment (75.4% and 44.6% respectively). This was followed by Deluxe/Boutique Resorts (30.8%) and Tourist class Hotels and Resorts at 24.6% and 9.2% respectively.
TRADING PERFORMANCE (OCCUPANY & ADR) A reasonably positive sentiment exists for trading performance throughout the Americas in the short term, with this opinion strengthening slightly in the medium term. Key performers in the short term include Boston, New York, San Francisco and Washington. Within these markets, increases in demand and continuing supply constraints will keep upward pressure on rate and occupancy. The weight of opinion for Phoenix, Dallas, the Caribbean and Atlanta is for these markets to trend downwards over the short term. In the medium term, investors are expecting continued erosion of trading fundamentals in Phoenix and Dallas, due to easier development controls and availability of sites. Hot markets in the medium term include San Francisco and Los Angeles, with strong expectations in New York, Boston, Washington and Central/South America. Opinion is divided on the performance of Atlanta with a slight sway towards the positive. The Caribbean and Orlando are improving markets going forward. Trading Performance Expectations
Some investors expected cap and discount rates well below the lower quartile particularly in New York. The market for acquisition is also expected to become easier and initial yields to increase for all markets except Boston. In general terms, values should remain firm in this and the major urban markets provided the income growth is proportionately greater than the yield swing. Yields in the Caribbean are expected to increase substantially in order to attract new investment. Intense investor demand will keep yields from rising excessively in San Francisco and New York. The average median initial yield was 11.1% for the region which infers some 400 basis points growth referenced to the unleveraged IRR expectations. Individual markets that demonstrated above average growth by the same measure included the majority of the strong trading cities and those in the upturn of the cycle including Boston, Chicago, Hawaii, Los Angeles, San Francisco and Washington DC.
IRR for New Acquisition (%) Lower Upper Quartile Quartile Atlanta 13.8 18.5 Boston 12.0 16.0 Chicago 13.0 18.0 Dallas 14.0 18.5 Hawaii 12.0 18.0 Los Angeles 13.0 18.0 Miami 13.0 18.0 New York 12.0 16.3 Orlando 13.0 18.0 Phoenix 13.3 18.8 San Francisco 12.0 16.8 Washington, D.C. 12.0 16.0 Canada^ 13.0 18.0 Caribbean 14.0 19.0 Central/Sth America* 14.0 20.0 IRR = Internal Rate of Return Rate on unleveraged, all cash transactions *Mexico City, Sao Paulo, Rio de Janeiro, Buenos Aires ^Montreal,Toronto, Vancouver Source: Jones Lang LaSalle Hotels' HISS
^
4
Median 15.0 15.0 15.0 15.0 15.0 15.0 15.0 14.0 15.0 15.0 14.5 15.0 15.0 16.0 16.5
Americas
Cap Rate (Initial Yield) for New Acquisition (%) Lower Upper Median Short Term Quartile Quartile Cap Rate Trend” Atlanta Boston Chicago Dallas Hawaii Los Angeles Miami New York Orlando Phoenix San Francisco Washington, D.C. Canada^ Caribbean Cntrl/Sth America*
10.0 9.3 10.0 10.0 10.0 9.0 10.0 9.0 10.0 10.0 9.0 9.5 10.0 10.5 10.3
12.4 12.0 12.0 14.0 12.0 12.0 12.0 12.0 14.0 14.0 12.0 12.0 13.0 14.0 15.0
11.0 10.5 10.5 11.5 10.5 10.5 11.0 10.0 12.0 12.0 10.0 10.6 11.5 12.0 12.5
Higher (40.9%) Neutral (-3.3%) Neutral/Higher (16.7%) Higher (33.3%) Neutral/Higher (20.0%) Neutral/Higher (18.2%) Higher (31.8%) Neutral/Higher (9.7%) Higher (28.0%) Higher (29.0%) Neutral (2.9%) Neutral/Higher (17.9%) Neutral/Higher (12.5%) Higher (47.4%) Neutral/Higher (16.7%)
INVESTMENT INTENTIONS On average, investors in the Americas favor a buy sentiment as ranked by 45.1% of all respondents. Strong buy markets included Hawaii and Los Angeles, certainly good news for Japanese owners looking to divest their quality assets. Investors also see buying opportunity in Canada, the Caribbean, and South America, in spite of risks in the latter two regions. Selling sentiment is strongest in Dallas, Miami, Orlando and Phoenix, the markets at the crest or on the downturn trend.
Investment Intentions in the Short Term
Rate on unleveraged, all cash transactions *Mexico City, Sao Paulo, Rio de Janeiro, Buenos Aires ^Montreal,Toronto, Vancouver "Net Balance indicated in brackets Source: Jones Lang LaSalle Hotels' HISS
MARKET CYCLE Wide variation of opinion within markets was particularly noticeable in some instances. With reference to the Trading Expectations we can expect Orlando to remain stationary as sentiment is marginally weighted to the positive, Dallas and Phoenix to continue to slide while the Caribbean may bounce a little quicker. Atlanta is expected to remain stationary with divided opinion about its future direction while the urban centres in upturn markets will continue to grow. Chicago is likely to hover at the peak as opinion going forward is still weighted to the positive. Miami is the market that contradicts its position on the cycle as investor's opinion was widely divided. While some saw its position as rising, equally others saw it as having peaked. Hotel Market Cycle
,
Source: Jones Lang LaSalle Hotels’ HISS
5
Asia Pacific
ASIA PACIFIC
INVESTMENT YIELDS
Many Asian markets are starting to roar again as investors indicate tremendous positive sentiment for trading performance. Investors are willing to accept competitive yields in many markets but demand reward for their risk through higher IRRs. On average, investor sentiment indicates the Asia Pacific markets are on the early upturn of the market cycle. Strong buy sentiment exists in many of the Asian markets with Bali and Tokyo the stand-out cities at 100% and 90% buy votes respectively.
While many investors demonstrated a willingness to accept competitive initial yields in many markets, they demanded substantial reward and expected comparatively high income growth to satisfy their IRR requirement. Initial yield expectations were lowest in the tightly held or actively sought after Asian markets, namely Hong Kong, Tokyo, Singapore and Seoul. The highest rates of return were being demanded from the less transparent markets of Bali, Jakarta, Beijing, Mumbai and again from Seoul.
Investors responding to this survey were mainly interested in First class hotels (66.1%), followed by Deluxe/Boutique Hotels (43.5%), First class resorts (38.7%), Tourist class hotels (29.0%), Deluxe/Boutique Resorts (19.4%) and Tourist Class Resorts (17.7%).
The Australiasian markets offered reasonable growth, as measured by the difference between initial yield and unleveraged IRR at 400 basis points. The major commercial markets of Asia each offer income growth potential at an average of 392 basis points which is subdued by their tightly held or competitive investment intentions. The yield differential at an average of 672 basis points in the 1990's tiger economies and emerging markets is a reflection of: expected strong growth in markets such as Bali, Phuket, Seoul, Bangkok and Beijing; risk in the poorly performing Jakarta and Kuala Lumpur markets; and uncertainty in Mumbi.
TRADING PERFORMANCE The Asian recovery is well on the way although some short term pain is expected in Jakarta, Kuala Lumpur, Auckland and to a lesser extent the Gold Coast. The hot markets are currently Bangkok, Hong Kong, Phuket, Seoul and Singapore. Add to this Bali and Beijing in the medium term. Eleven of the 15 markets showed a trend toward stronger trading conditions in the medium term over the short term sentiment. The most noticeable exception was Sydney which had a strong short term performance expectation, but was still positive in the medium term. Over the medium term, the market expecting the biggest bounce is predicted to be Jakarta reflecting a disastrous short term outlook recovering to marginally positive in the medium term. Other markets in this category include Kuala Lumpur, Auckland and the Gold Coast. Trading Performance Expectations
Auckland Gold Coast Melbourne Sydney Bangkok Bali Jakarta Kuala Lumpur Phuket Singapore Beijing Hong Kong Seoul Tokyo Mumbai
IRR for New Acquisition (%) Lower Upper Quartile Quartile 12.3 18.8 14.0 19.5 12.0 14.6 11.0 15.8 12.6 20.0 15.0 20.0 15.0 25.0 12.6 20.0 13.0 19.5 10.0 14.6 17.3 25.6 10.0 14.6 14.3 17.9 12.0 15.0 15.3 21.3
IRR = Internal rate of return Rate on unleveraged, all cash transactions Source: Jones Lang LaSalle Hotels' HISS
Jones Lang LaSalle Hotels’ HISS
6
Median 14.5 15.0 13.0 15.0 15.0 20.0 22.0 15.0 15.0 12.5 20.8 12.0 16.0 13.0 16.8
Asia Pacific
Cap Rate (Initial Yield) for New Acquisition (%) Lower Upper Median Short Term Quartile Quartile Cap Rate Trend* Auckland Gold Coast Melbourne Sydney Bangkok Bali Jakarta Kuala Lumpur Phuket Singapore Beijing Hong Kong Seoul Tokyo Mumbai
10.0 10.0 8.6 8.5 9.3 10.0 11.1 9.1 10.0 7.1 11.0 7.6 9.1 8.0 10.0
11.4 11.0 10.8 10.0 11.0 14.5 17.9 12.9 12.0 8.9 13.0 10.0 10.8 10.0 13.6
10.0 10.0 10.0 10.0 10.0 10.5 12.8 10.8 10.0 8.0 11.5 8.8 9.8 9.0 11.5
Higher (35.7%) Neutral/Higher(15.0%) Higher (22.2%) Neutral (0.0%) Neutral/Higher (8.3%) Neutral (0.0%) Higher (31.3%) Neutral/Higher (9.1%) Neutral/Lower(-18.8%) Neutral/Lower(-19.0%) Higher (33.3%) Neutral/Lower(-5.3%) Neutral/Lower(-10.0%) Neutral (0.0%) Neutral/Lower(-16.7%)
Rate on unleveraged, all cash transactions * Net Balance indicated in brackets Source: Jones Lang LaSalle Hotels' HISS
MARKET CYCLE The Asia Pacific hotel and resort sector is considered to be bottoming out with many of the major markets in an upturn phase of the market cycle. The majority of the South East Asian markets are either in a trough or early upturn reflecting sentiment expressed in short term trading performance expectations in these markets. The exception is Phuket, which has performed very strongly since 1998 and in turn investor interest has remained buoyant.
INVESTMENT INTENTIONS A definite buy sentiment exists throughout the Asia Pacific, with few investors interested in building or in fact selling. A mixed response between the South East Asian markets reflects the various stages of recovery for each city. Bali is the "hot-spot" with a 100% buy sentiment. Within Bali and Bangkok, investor sentiment is a case of "get some of the action if you can", however competition will be strong as competitive yields will have to be accepted in the short term. Phuket and Singapore are also solid buy markets, while in Jakarta investors can expect the buy momentum to increase as performance improves and the political/economic situation further stabilises. The North Asian markets are more tightly held and as such strong buy sentiment exists. Most investors want a piece of the Tokyo market and to trade in this safe house will be competitive. The same situation exists in Seoul with the few properties that have been traded being hotly contested. Within Hong Kong strong positive sentiment exists but growth is not outstanding. Based on investment sentiment and performance indicators, to buy or build in Mumbai shows a deal of faith in the longer term. Sellers in this market should expect a deep discount. Within Australasia, the strongest sentiment is to hold hotel assets, with Sydney having the highest buy option at 44.8%. Very little emphasis is on the build option in view of the market's recent supply additions.
Investment Intentions in the Short Term
The North Asian markets, excluding Seoul, are also in an early upturn phase. It is apparent that investors recognise hotel performance in Seoul has been relatively strong and less affected than other neighbouring markets by the Asian financial crisis. Australasia's markets are considered to be in a trough, reflective of the recent wave of new supply. However, Sydney is perceived to be at the late upturn stage due to the removal of the bed tax and the Olympic Games which serve as positive counters to supply increases. Notably, the majority of respondents maintain a positive outlook for Sydney after the Olympics. Hotel Market Cycle
Source: Jones Lang LaSalle Hotels’ HISS
7
Hotel Investor Sentiment Survey (HISS) Issue 1 September 2000
ABOUT THE SURVEY This report presents the inaugural results of Jones Lang LaSalle Hotels' HISS (Hotel Investor Sentiment Survey) - a world first. This exclusive survey identifies the weight of opinion of future trends and also establishes a benchmark position on a number of key issues from which future trends can be considered. Jones Lang LaSalle Hotels' HISS is targeted at the world's 800 largest investors and/or owners of hotel/resort properties. An overall response rate across all three regions of 23.2% was achieved. The following table details the primary investment vehicle structure of these investors.
size of the market or the respondent. Therefore results do not necessarily represent the volume or value of capital flow. In addition, the cities are currently not weighted by size of market ie. number of investment grade rooms. Weighting is currently only conducted for the regional and global averages and these are done based on the number of responses for each city and question.
DEDICATED HOTEL OFFICES New York 153 E. 53rd Street New York 10022 tel: +1 212 812 5700 fax: +1 212 421 5640
Primary Investment Vehicle Direct Sole Ownership Unlisted Fund, Syndicate, Trust or Partnership Publicly Listed Fund Publicly Listed Corporate
Americas Asia Pacific Europe 39.1% 47.5% 46.8% 45.3% 3.1% 12.5%
23.0% 11.5% 18.0%
36.2% 4.3% 12.8%
GLOBAL 44.2% 34.9% 6.4% 14.5%
As the HISS is directed only at investors it does not include advisors or analysts who have assessed or advise what yield levels are required to consummate a transaction. The HISS yields are those that investors seek and as they are the median response, this therefore confirms the premise that yields required to successfully secure an investment will be lower than the HISS median and even the lower quartile. Accordingly, the HISS yields should not be applied in any valuation or appraisal assignment.
TECHNICAL NOTES Definition of Net Balance Net Balance is a representation of the weight of opinion. It is the percentage of respondents who respond positively minus the percentage of respondents who respond negatively. The maximum score of + or - 100% indicates that all respondents have given a positive or negative response respectively. A score of 0% indicates the same number of positive or negative responses to a particular question. Median and Quartiles The median response is used for yield analysis limiting the effect of outliers on the mean. The upper and lower quartile returns are provided so that investors may judge their response against the weight of opinion. The lower quartile is the median of the lower half of replies, while the upper quartile is the median of the higher half of replies. Market Cycle Assessment The most common response was chosen to represent the weight of opinion, with its position on the cycle pushed towards the direction of the highest response either side of the dominant choice.
8
Weighting of Responses Results are averaged across all respondents and are not weighted by
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