In 2014, equity funds invested $7.4 billion in U.S. hotels

Lodging Econometrics reports that for hotels with a reported selling price, investment totaled $22 billion in the U.S., in 2014. Equity funds were the most active investors adding $7.4 billion in hotels, most of which were portfolio purchases. Publicly traded REITs were the next biggest acquirers, investing $6.4 billion, primarily focusing on high-profile single assets divested by privately held hotel companies.

Although on balance they were net-sellers in 2014, privately held hotel companies were also significant buyers, investing $4.4 billion, mostly in single assets and smaller portfolios. Publicly traded REITs were significant purchasers of large, high profile, single-asset Luxury and Upper Upscale hotels that only come to the market during periods of high liquidity. The demand for these assets from equity funds, REITS and privately held hotel companies caused a shift in the 2014 transaction mix.

For the first time in this cycle, more than 50 percent of all hotel transactions occurred in the luxury, upper-upscale and upscale chain scales. LE said it expects that transaction volume will intensify and selling prices will continue to soar through the expansion phase and into the early part of the maturity phase of the current cycle, probably peaking one to two years ahead of industry profitability in 2018 or 2019.

Virtual Event

Hotel Optimization Part 3 | January 27, 2021

With 2020 behind us and widespread vaccine distribution on the horizon, the second half of the new year is looking up, but for Q1 (and most likely well into Q2) we’re very much still in the thick of what has undeniably been the lowest point of the pandemic. What can you be doing now to power through and set yourself up for a prosperous 2021 and beyond? Join us at Part 3 of Hotel Optimization – A Virtual Event on January 27 from 10am – 1:05pm ET for expert panels focused on getting you back to profitability.