U.S. Hotel Investment Reaches $12.5 Billion in 2012, Down 36% From 2011 Pace

U.S. Hotel Investment Reaches $12.5 Billion in 2012, Down 36% From 2011 Pace

Vacation News » North America Vacation News Edition | By Michael Gerrity | January 21, 2013 8:30 AM ET

Chicago-skyline-at-sunset.jpg According to the Hotel Transaction Almanac, a new report coming out in February from STR Analytics and the Hotel Investment Barometer, more than US$12.5 billion in hotel transactions occurred in the U.S. in 2012.
While hotel industry fundamentals continued to improve in 2012, investment activity dropped compared with the US$19.4 billion in asset trades that occurred in 2011.
"Hotel investment activity clearly slowed in 2012, but pricing remained strong," said Steve Hennis, director at STR Analytics. "We expect transaction volume to rise again in 2013 as RevPAR recovery continues to drive higher profits, supply growth remains negligible and financing becomes more accessible."

Key findings from the 2013 Hotel Transaction Almanac:
  • The average price per key in 2012 remained relatively stable to that of 2011 at close to US$190,000.
  • Only 12 percent of transactions involved distressed assets, a sharp decline from 2012 when almost one out of three asset trades included struggling properties.
  • Only 16 percent of hotel acquisitions were by real estate investment trusts, a noticeable decline from 2012 when 35 percent of purchases were by REITs.
  • Surprisingly, the average cap rate declined to 9.1 percent in 2012 from 10.4 percent in 2011.
The Hotel Transaction Almanac is an overview of historical trends in U.S. deal volume and pricing. It includes aggregate breakdowns by region, property class and location type for numerous key metrics.

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