Author of www.HotelLawBlog.com
2 June 2007
Hotel Lawyer on hotel sales, values, buyers and cap rates — reporting from Meet the Money® hotel financing conference. If you are buying or selling hotels, or looking for hotel financing, you have to be interested in today’s posting. This is all about hotel cap rates and values, and the biggest hotel sales as well as the biggest buyers in the recent times. All this information was provided to the crowd attending Meet the Money® a few weeks ago by Suzanne Mellen of HVS International. There is some great information here, that belongs with the other classics on www.HotelLawBlog.com.
How many “Major Hotel Transactions” and what average price per room?
HVS keeps track of “Major Hotel Transactions” which they define to be transactions for $10 million or more. Suzanne’s first slide, below, show us the volume of these Major Hotel Transactions since 1990. You can see the big peak that we all remember in 1997 and 1998, and we were getting back up to that number of transactions again in 2006, after the downturn in 1999.
[double click the slide to enhance sharpness]
Here is the same data displayed graphically in a bar chart This format makes it a little easier for some of us to see the trends.
This time the average price per room is over laid on the transaction volume graphic. It is interesting to see how the average price per room correlates with transaction volume
[double click the slide to enhance sharpness]
Suzanne gave us another graphic portrayal of the hotel sales transactions and price per room in this stacked bar chart, showing greater detail on average price per room for the transactions over the past few years.
The BIGGEST transactions and buyers.
I always like to see the “biggest” lists. Here is Suzanne Mellen’s list of biggest hotel transactions by price per room:
and by total sales price . . .
and the biggest buyers last year by number of transactions:
and biggest buyers by dollars spent on hotel acquisitions:
Cap Rate Comparison (1994-2006)
Finally, Suzanne gave her graphic showing cap rates for hotels and other real estate classes from 1994 through 2006. You can see why investors have found hotels to be so attractive with their higher cap rates, but that difference is diminishing.
Where does it all end? I am not sure that anyone knows, but I just arrived in New York where I will be attending the NYU Hotel Conference along with a record crowd, and I will share any new perspectives I get with you shortly.
Suzanne Mellen, Managing Director of HVS International, can be reached at 415.268.0351 or SMellen@hvs.com.
Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $50 billion of hotel transactions, involving more than 1,000 properties all over the world. For more information, please contact Jim Butler at email@example.com or 310.201.3526.
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Jim Butler is a Founding Partner of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm’s Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at firstname.lastname@example.org or 310.201.3526. For his views on current industry issues, visit www.HotelLawBlog.com.