BROOMFIELD, Colorado—The hotel industry’s transactions pace accelerated in 2018.
STR tracked 507 individual hotel transactions and 39 portfolio sales in 2018 to produce the Hotel Transaction Almanac, a comprehensive annual report which details hotel asset trades over the past year in the U.S. and is to be released in the coming days. (STR is parent company of Hotel News Now.)
Among highlights, the report notes that transactions activity in 2018 surpassed all other years in the current cycle, upscale hotels led the way in sales, and the most properties were transacted in Washington, D.C.
Transaction volume
In terms of transaction activity, 2018 was the best year this cycle, with 707 property sales totaling $29.5 billion in transaction volume. This represented a 25% increase in number of transactions and a 49% increase in volume over 2017 levels.
We expect a lower level of transaction activity in 2019, with asset pricing similar to 2018 levels. Strong projected operating fundamentals should be balanced by increased interest rates and concerns over broader U.S. economic performance in the next one to two years.
Acquisition by chain scale
Hotels in the upscale chain scale continued to account for the greatest share of hotel transactions in 2018 at 26%. The economy segment saw an increase in the number of transactions in 2018 largely due to the disposition activity of Extended Stay America, which sold three portfolios totaling 57 properties.
Independents saw a decline in both total transactions and transaction share, decreasing from 131 properties representing 23% of all 2017 transactions to 117 properties representing 17% in 2018.
Major market sales
Washington, D.C.-Maryland-Virginia was the most active market for transaction activity, with 27 properties sold at an average price per room of $265,000. Atlanta, Georgia, also saw a high number of sales, with 23 deals representing 3,164 rooms. New York, New York, saw the third-highest number of sales in 2018, with the second-highest price per room of $505,000, behind the $539,000 achieved by the Miami-Hialeah, Florida, market.
Top sales by price
2018 brought record price-per-room figures, with the Soho House Chicago and the Plaza Hotel selling for more than $2 million per room. Three hotels sold for between $1 million and $1.4 million per room.
The highest-priced individual property transaction in 2018 was the Waldorf Astoria Grand Wailea, which sold for $1.1 billion. The rest of the top five included properties in San Antonio, New York, Miami Beach, and Phoenix, all of which transacted for more than $400 million each.
The Transaction Almanac features a list of non-confidential hotel transactions as well as aggregate breakdowns by region, class, chain scale, location type and other property classifications for numerous key metrics. The report also discusses historical trends in data points such as deal volume, pricing, cap rates and interest rates. The data used in the report is sourced from STR’s in-house transaction database and from data partner Hotel Brokers International (HBI). The 2019 Hotel Transaction Almanac is available for purchase at: https://www.str.com/products/hotel-transaction-almanac/.
This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.
