Jul
28

Hotel Sales Prices Per Room up 28%

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Strong competition among large-scale buyers has helped fuel double-digit increases in per-room selling prices for hotels. Lodging Econometrics reported last week that average selling price per room soared 28% year-over-year to $150,223 per room in the first half of 2014, compared to $117,300/room in 1H 13. Prices for the first half of this year were also up 17% over the year-end average of $128,352 for ‘13.

“A complete economic recovery, a forecast for continued steady economic growth, receptive capital markets and a docile pipeline make it an interesting time for investors,” according to Portmouth, NH-based LE’s mid-year forecast. “Based on the makeup of their portfolios, it could be an ideal time to be both a seller of hotels, or conversely, an acquirer of additional assets. It could also be opportune to be a holder of existing assets seeking additional operating improvement and asset appreciation too.”

Competition is especially strong for higher-end assets,, as REITs and private equity groups with similar investment objectives vie for larger properties in the CBDs of major cities. The competition has been similar for hotels in the top resort destinations, which have been a little slower to recover. “As a result, these assets still have considerable earnings and appreciation potential ahead,” according to LE.

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