U.S. Hotel Market Enjoyed $19 Billion of Direct Investment in 2011

U.S. Hotel Market Enjoyed $19 Billion of Direct Investment in 2011

Vacation News » North America Vacation News Edition | By Michael Gerrity | June 7, 2012 8:30 AM ET

St.-Regis-Atlanta.jpg According to the inaugural Hotel Transaction Almanac, a report from STR Analytics and the Hotel Investment Barometer, more than US$19 billion in hotel transactions occurred in the U.S. during 2011.

The Hotel Transaction Almanac combines STR Analytics' in-house transaction database with that of data partner Hotel Brokers International (HBI) to create a comprehensive hotel transactions report.

"Our new dataset of hotel transactions continues the expansion of the most trusted source of hotel performance data into the realm of hotel investments," said Steve Hennis, director at STR Analytics. "This is part of our commitment to provide the most complete information to our clients in all branches of the hotel industry, which includes investment, financing, appraisal and consulting.

"One of the key benefits we have at STR Analytics is the ability to match transaction data with STR performance metrics to better understand trends in pricing," Hennis continued. "Most notable is the ability to calculate room revenue multipliers for every transaction."

Key findings from the Hotel Transaction Almanac:

  • 31 percent of deals in 2011 involved distressed assets.
  • 35 percent of hotel acquisitions were by REITs.
  • The average room revenue multiplier was 4.2.
  • The average cap rate rose from 9.1 percent in 2010 to 10.5 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. The report also includes valuation parameters including price per key, room revenue multiplier, additional capital invested, cap rate and financial terms including interest rates and loan-to-value ratios. The hotel Transaction Almanac will be produced on an annual basis going forward.

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