US Hotel Transactions Increase in 2013

According to the Hotel Transaction Almanac, a report from STR Analytics, US$16.9 billion in hotel transactions occurred in the United States in 2013.

This represents an increase of nearly US$4.0 billion in asset trades compared to the US$13.0 billion that occurred in 2012.

“After a relatively slow year in 2012, it’s promising to see hotel investment activity regain momentum in 2013,” said Steve Hennis, director at STR Analytics. “We anticipate deal volume to rise again in 2014 with demand compression and only modest levels of new hotel supply fueling the appetite of the hotel real estate sector.”

Key findings from the 2014 Hotel Transaction Almanac:

- Pricing remains strong with the average price per key in 2013 at US$192,000.
- The volume of distressed asset sales continues to decline with only 7% of transactions involving distressed assets.
- The average interest rate for financing acquisitions was 4.6%, the lowest point on record.
- Additional capital injected into properties post-acquisition averaged $27,000 per room.
- The average cap rate declined to 8.8% in 2013 from 9.4% in 2012.

The Hotel Transaction Almanac combines STR Analytics’ in-house transaction database with that of data partner Hotel Brokers International (HBI). It 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 is produced on an annual basis.