The lack of pricing consensus has resulted in hotel investors choosing to hold assets as they wait for better conditions to emerge - according to the latest Hotel Investor Sentiment Survey (HISS).

The survey -  by Jones Lang LaSalle Hotels - has also suggested that there are some exceptions including Dublin, Lisbon and the Spanish resorts, which have been hit harder by the recession, where investors are now keen to cut their losses and sell as any upside from a recovery appears too distant.

Mark Wynne-Smith, CEO of Jones Lang LaSalle Hotels in EMEA, said: "This latest survey confirms the reasons for the exceptionally low levels of transaction activity as it shows that investors are very unsure about 2009 income levels and nobody likes to buy in to a falling market. As economies across EMEA continue to deteriorate, investors will start to scan the market for investment opportunities, but mainly in the form of distressed assets, non performing loans or performing assets priced on 2009 projections in key gateway cities such as London or Paris. The survey shows that there is consensus pricing amongst buyers but certain sellers need to smell some more coffee before they will see their assets sold".

A marked decline in short term trading expectations has occurred across all cities in EMEA, with the lowest expectations reported for cities in Central Eastern Europe (CEE) and the UK. CEE, which initially proved resilient to the financial downturn, now looks set to face a more severe recession compared to Western Europe. With global tourism expected to fall substantially, investors are expecting hotels performance to decline in coming months, in particular for markets which have experienced substantial supply growth in recent years, notably within the MENA (Middle East North Africa) region.

Medium term trading expectations have improved for almost half of all cities tracked in comparison to the last survey in October 2008, the majority of which are located in Western Europe. Cuts in interest rates, quantitative easing measures and a sense that we are approaching the bottom of the market appear to be the reasons behind this conclusion.

Yield requirements continued their upward trend and increased on average by 120 basis points since the last survey in October 2008. The softening of yields was most notable in Spain and the UK, but was less severe in other western European countries such as Germany and remained lowest for key gateway cities. Wynne-Smith continued: "With yield requirements reaching an average 9.2% for the region, investors have become very risk-averse and are currently favouring a return to the comfort zone of their home markets.

Going forward, sentiment appears unlikely to worsen markedly and the positive signs appearing in the US equities market could indicate that the bottom of the market is in sight but the responses do not suggest that the reaching the bottom of the market will necessarily mean the start of a period of recovery. "We expect to move into a period of stabilisation starting in the last quarter of 2009 but the coming six months are crucial in determining if the month on month percentage falls will generally reduce in size" concluded Wynne-Smith.