The hotel transactions market saw a great boost in 2013 thanks to the influx of capital, according to the 2013 Select Major U.S. Hotels Sales Survey released by LW Hospitality Advisors. The survey included 154 single-asset sale transactions of over $10 million each that are not part of a portfolio allocation, totaling approximately $11 billion and 45,000 hotel rooms.
The LWHA survey from 2012 reported just 107 transactions totaling $6 billion and 27,000 hotel rooms. Comparing dollar volumes from 2012 to 2013 resulted in an 85 percent increase, while the number of trades has risen 45 percent and the sales price per room remains relatively unchanged. Further comparison shows only 36 hotel transactions in 2009 for a total of 18,600 hotel rooms worth $2.3 billion.
Evidence of this can be found as the Blackstone Group set the record for an initial public offering in the hospitality industry with its late-year IPO of Hilton Worldwide Holdings, which rose $2.35 billion in mid-December. Hyatt Hotels also made headlines with its massive $717 million purchase of the Peabody Orlando hotel. The 1,641-room hotel was sold by an affiliate of Memphis, Tenn.-based investment firm Belz Enterprises and Orlando-based Estein & Associates USA.
While deal volume showed a slight decline in 2012, price per key rose compared to 2011, then deal volume increased exponentially in 2013 while price per key showed no change.
The survey highlighted the Affordable Care Act's rollout as a challenge for the hotel sector, as is the government's efforts to raise the minimum wage for employees. Product improvement programs that were previously not enforced during the economic recession have now surged back into the limelight during 2014, and capital expenditures are expected to exceed the prior record level established in 2008.