Hotel investors believe the current environment will accelerate a trend of increased interest in select-service properties due to their streamlined cost structure.

Speaking on the "Wall Street Talks" panel at the Hunter Hotel Investment Conference in Atlanta, Hersha Hospitality Trust President and Chief Operating Officer Neil Shah said the heightened investment in select-service began last cycle, and because of the complete "night and day difference between levels of cash burn between select-service and full-service hotels," the industry will see more of that investment.

This current cycle also highlighted the entrepreneurial operators who better managed cash flow.

"That was a big divergence among the [real estate investment trusts], how many were brand-managed versus franchisee-managed and how much they burned cash accordingly," he said.

Michael Medzigian, chairman and managing partner of real estate investment management firm Watermark Capital Partners, said those looking to purchase an asset right now will not find it at distressed pricing.

Resorts today are going for nearly $2 million per key, he said.

Scott Trebilco, managing director of global investment company Blackstone Group, said his company hasn't been able to compete on many deals. People are arguably paying higher than pre-COVID-19 levels.

"Truth is, everyone's been disappointed with the lack of hotel deals. Everyone thought this is the biggest shock to the system we've ever seen and how are people going to survive," he said. "People have survived one way or another."

Because of that, many are hanging on to assets. While there are smaller deals happening one by one, he's not seeing many opportunities for larger institutional scale deals.

On March 14, Blackstone Real Estate Partners and Starwood Capital announced it would acquire Extended Stay America along with its paired-share real estate investment trust ESH Hospitality in an all-cash offer of $6 billion.

Beyond that, he said Blackstone has only executed a couple of single-asset deals.

Trebilco noted many non-traditional investors are entering the hotel space and more pools of capital have formed.

Shah said his company, a hotel real estate investment trust, sold seven assets last year. Three of them went to alternative uses and the rest went to private equity-backed hotel buyers.

"They were I'd say a 15% discount to pre-COVID pricing. They were hotels that didn't have much cash flow earn. So for that new investor coming in, they were going to make a 15%, 20% return on the deals — they're in high-quality markets," he said.

Though lenders have been flexible this past year, Shah said the industry is getting to a point where there will be fatigued owners and lenders, resulting in a higher volume of transactions.

Tyler Morse, chairman and CEO of hotel development and management company MCR, said his company purchased 30 hotels throughout the past year.

"We were 100% playing offense," he said.

In addition to remaining an active hotel buyer in the teeth of the pandemic, MCR also purchased a software company.

Morse added replacement costs are now through the roof, noting "$200,000 is the new $100,000 a key."

"You can't build a Residence Inn now for under $200,000 a key. That number used to be $150,000 and 10 years ago it was $100,000," he said.

When Morse first entered the hotel industry, he looked at a Kimpton hotel in San Francisco that was in pristine condition. It was listed for $100,000 per key, and at the time, he said that felt insane. That same asset has since traded for $400,000 and $600,000 per key.

Ultimately, Shah said not to be discouraged with the current transactions environment; deals will get done.