U.S. Hotel Deal Sales Volume in 2018 Increased 49% YOY

A total of 707 property sales totaling $29.5 billion made 2018 the most active year for hotel transactions since 2007, according to the Hotel Transaction Almanac produced by STR’s Consulting & Analytics office and Hotel Brokers International (HBI).

Total number of transactions grew 25% from 2017, while sales volume was up 49% from the previous year.

“We’re near the peak of the cycle right now where there is opportunity for very large profits,” said Joseph Rael, STR’s senior director of consulting & analytics. “Buyers feel that they can pick up strong short-term returns and gain an asset in an attractive market, while owners like the large valuations with economic uncertainty on the horizon.”

Key findings include:

• Washington, D.C. was the most active market with 27 transactions at an average price per room of $265,000, while Atlanta ranked second with 23 sales.
• Miami achieved the highest price per room at $539,000, followed by New York City at $505,000.
• The highest priced individual property transaction was the Waldorf Astoria Grand Wailea, which sold for $1.1 billion. This price ranked second all-time among individual sales included in the Hotel Transaction Almanac.
• The four next highest priced sales, all above $400 million, came in San Antonio, New York City, Miami Beach and Phoenix.
• The highest transactions based on price per room were the Soho House Chicago ($2,375,000) and the Plaza Hotel ($2,127,660) in New York. The price per room for each of those transactions are the top two in the history of the Hotel Transaction Almanac.
• Hotel companies accounted for 26% of acquisitions with known buyers in 2018, up from 18% in 2017. Sales to foreign investors more than doubled from 32 in 2017 to 72 in 2018. Private-equity firms saw the greatest growth in 2018 of all buyer types, up from 31 transactions in 2017 to 114 in 2018.

“We expect less transaction activity in 2019 with asset pricing similar to the levels from 2018,” Rael said. “Strong projected operating fundamentals should be balanced by increased rates and broader economic concerns.”