As seen in ENR:

As construction’s winter slowdown began, the industry’s unemployment rate worsened in December to 16%, from 13.1% in November. But the industry did add 17,000 jobs last month and its December rate was much improved over the December 2011 mark of 20.7%, the Bureau of Labor Statistics reported.

Those BLS industry-specific rates are not adjusted for seasonal swings. Jobless rates for the highly seasonal construction industry tend to climb in winter months, when the volume of projects dips.

Construction economists said seasonal factors may help explain the rate’s rise from November and mild December weather might have been a reason for the uptick in the number of construction jobs.

The bureau’s latest monthly look at the U.S. employment situation, released on Jan. 6, showed that construction’s nonresidential specialty trade sector gained 20,200 jobs and residential building firms picked up 2,500. Those increases were offset a bit by declines in the residential specialty trade, nonresidential building, and heavy/civil segments.

Architectural and engineering services, viewed as a leading indicator for the construction industry, posted a tiny increase of 500 jobs last month.

Anirban Basu,  Associated Builders and Contractors chief economist, had an upbeat reading of the latest numbers. He attributed the increase in the construction unemployment rate mainly to “seasonal factors” and said it “should not be interpreted as evidence of industry decline.”

Moreover, Basu said that with an overall net gain of 200,000 jobs last month, “The U.S. economy is enjoying resurgence, one that has begun to encompass the nation’s construction industry.” He added, “While major economic headwinds remain, including elevated levels of distressed properties and disciplined lending, the worst appears to be behind the U.S. construction industry.”

Ken Simonson, Associated General Contractors chief economist, said unusually warm weather in many parts of the country probably helped produce December’s increase in construction jobs.

Simonson added, “Nonresidential construction is clearly driving last month’s employment gains. But it is too early to tell whether those gains came because the weather was good enough for crews to keep working well into December or because demand is truly rebounding.”

Link to original article HERE

Interesting article on some of the successes and difficulties of investing in hospitality properties. Congratulations to Hersha Hospitality Group on their marquee transaction in Miami.

Original article in the Wall Street Journal.

Hotel Deals Decline as Stocks Drop

For acquisition-minded hotel owners, now would seem to be the perfect time to pounce: Hotel property prices are relatively low, while hotel revenue is growing. Yet acquisition activity has slowed.

The reason hinges on concerns about the overall economy rather than any dip in hotel results so far, say analysts and real-estate firms.

The Courtyard Miami Beach Oceanfront hotel was purchased recently by Hersha Hospitality Trust.

With growing worry that the global economy could be pushed back into recession, investors have pummeled hotel stocks, since hotels are the category of commercial real estate most quickly affected by economic shifts. With hotel stocks depressed, the main way for real-estate investment trusts and other buyers of hotels to raise money—selling stock—has gotten more expensive in this year’s second half.

Thus, many of the REITs have reined in their buying activity until their stocks recover.

“Whenever there are macroeconomic concerns, hotel stocks get hit hard,” said Larry Wolfe, senior managing director overseeing hotel transactions at brokerage Eastdil Secured. “We have a situation where hotels were performing well and expectations remain strong, but lodging stocks dropped. Clearly, there were some smart guys making assumptions that there was going to be a recession.”

Early in the year, the U.S. market for hotel acquisitions was sizzling, racking up a 163% increase in second-quarter deal volume compared with the same period a year earlier to nearly $4.9 billion, according to real-estate research company Real Capital Analytics. In the first quarter, the year-over-year increase was 147% to $4 billion. The growth rate slowed in the third quarter, when the $5.6 billion of hotel deals struck amounted to a smaller increase of 84% from the same period in 2010.

With buyers still relatively hesitant, deal volume in the fourth quarter likely will appear tepid when compared with last year’s fourth quarter, when $6.9 billion of hotel deals were done, according to Real Capital.

Host Hotels & Resorts Inc., one of the world’s largest hotel-property owners, spent $1.7 billion to buy 14 hotels across the globe from the second quarter of 2010 to this year’s second quarter. Then the buying came to an abrupt halt. In September, Host scuttled its deal to buy the St. Regis Monarch Beach resort in Dana Point, Calif. Now, Host is considering scrapping its $442 million purchase of the Grand Hyatt Washington, D.C., the company has said.

The reason for Host’s pullback centers primarily on the company’s stock price, which fell 35% in the third quarter amid a broader slide of hotel stocks. Most public hotel companies raise capital for use in acquisitions by selling their stock. But hotel stocks have fallen so much that hotel owners now would have to sell a larger allotment of their stock to raise enough to finance property purchases.

“If we can’t issue equity and we can’t raise capital by selling assets, then our acquisition activity will be muted,” said Host Chief Executive Ed Walter. At the same time, potential buyers of hotels that Host wants to sell are similarly hamstrung.

The trajectory of hotel stocks and the financial results produced by hotels have diverged in this year’s second half. The hotel component of the Dow Jones All REIT index, which tracks 16 hotel REITs, posted a 34.5% decline this year to Sept. 30. As of trading Tuesday, the index is down 24.4% for the year.

Meanwhile, U.S. hotels continue to post gains in nightly revenue per room and occupancy. They posted an 8.2% increase in revenue per room to $62.93 in the first 10 months of this year compared with the same period in 2010, according to Smith Travel Research. In that same period, occupancy at U.S. hotels increased by 2.6 percentage points to 61.8%. PKF Hospitality Research LLC, a hospitality industry research firm, projects that U.S. hotels will post an average gain in revenue per room of 6.2% in 2012.

Despite the pullback, buyers remain interested in hotels in top-tier U.S. cities and international gateways. Hersha Hospitality Trust, a REIT that owns 79 hotels in major U.S. cities, on Nov. 17 bought the 263-room Courtyard Miami Beach Oceanfront hotel for $95 million.

“There are only five or six markets in the country that we really believe can grow at a high enough pace in the next couple of years to warrant a great investment,” said Hersha President Neil Shah.