Comparing 2024 with 2023, the number of trades increased
over 4% while total dollar volume grew roughly 12%, average deal size rose
close to 7% and sale price per room remained flat.
NATIONAL REPORT – The LW Hospitality Advisors (LWHA) Q4 2024
Major U.S. Hotel Sales Survey included 103 sales of at least $10 million that
totaled over $3.4 billion and included approximately 17,200 hotel rooms with an
average deal size of $33.4 million and an average sale price per room of just
under $200,000.
New York City-based LW Hospitality Advisors Co-Founder,
President and CEO Daniel Lesser published a report summarizing the survey’s
findings.
In comparison, the Q4 2023 survey included 86 sales that
totaled just over $3 billion and included approximately 13,900 hotel rooms with
an average deal size of $35.4 million and an average sale price per room of
$219,000.
Comparing Q4 2024 with Q4 2023, the number of trades
increased approximately 20% while total dollar volume grew roughly 13%. Average
deal size dropped 6% and sale price per room diminished by roughly 9%.
For the year 2024, the LWHA survey includes 356 single
transactions over $10 million. These transactions totaled just over $14.3
billion and included approximately 58,900 hotel rooms with an average deal size
of $40.2 million, and an average sale price per room of $243,000.
For the year 2024, the LWHA survey includes 356 single transactions over $10 million. These transactions totaled just over $14.3 billion and included approximately 58,900 hotel rooms with an average deal size of $40.2 million, and an average sale price per room of $243,000.
In comparison, for the year 2023, the LWHA survey includes
341 sale transactions over $10 million. These transactions totaled just over
$12.8 billion and included approximately 52,500 hotel rooms with an average
deal size of $37.7 million, and an average sale price per room of $244,000.
Comparing 2024 with 2023, the number of trades increased
over 4% while total dollar volume grew roughly 12%, average deal size rose
close to 7% and sale price per room remained flat.
Newsworthy Q4 2024 observations include: Thirty trades, or
roughly 29% of the national Q4 2024 total, occurred in California and Florida.
These transactions total over $1.3 billion of investment activity, or 39% of
the national Q4 aggregate. Eighteen major hotel sale transactions in the state
of California represented $677 million of investment activity or 20% of the
national Q4 aggregate. Twelve major hotel sale transactions in Florida
represented a total of $663 million of investment activity or 19% of the
national Q4 aggregate.
Institutional investment platforms, several of whom are
lodging centric, were active in the Q4 2024 hotel transaction arena. Examples
of buyers include AWH Partners, Brookfield Properties, DiamondRock Hospitality
Co., Dynamic City Capital, Elliott Investment Management, Highline Hospitality
Partners, MCR, Noble Investment Group, Ohana Real Estate Investors, and
Prospect Ridge.
Examples of sellers include Ashford Hospitality Trust,
Atrium Holding Co., Blackstone Real Estate Income Trust (BREIT), Brookfield
Property Partners, Chartwell Hospitality, Chatham Lodging Trust, Fortress
Investment Group, Gaw Capital Partners, Hyatt Hotels Corp., KHP Capital
Partners, Magna Hospitality Group, MCR, McSam Hotel Group, Park Hotels &
Resorts Inc., Peachtree Hotel Group, Rockpoint Group, Summit Hotel Properties,
and Three Wall Capital.
An abundant amount of debt has been available for the sector
as evidenced by numerous recently announced acquisition financings and property
refinancings, including 4/6 Fontainebleau Development obtained two loans for a
combined $1.7550 billion to refinance the 1,594-unit Fontainebleau Miami Beach,
Florida, and the 685 key JW Marriott Miami Turnberry Resort & Spa in
Aventura, Florida. In connection with nine of its properties, Strategic Hotels
& Resorts obtained a $1.58 billion securitized loan refinancing from Bank
of America and German American Capital.
A significant volume of hotel debt originated during the
past decade is slated to mature during the near term. While no major bank
failures occurred during the last year, many believe the extend and pretend
strategy relative to distressed capital structures can no longer endure as
several lenders, particularly regional banks, have already incurred losses
writing down defaulted debt on their books.
The good news is that CMBS, private debt funds, and balance
sheet lenders are bullish on the sector and looking to deploy capital. Lodging
facilities are performing well relative to other asset classes and offer a
yield premium which has attracted capital to the sector.
The Federal Reserve reduced its benchmark interest rate
during its last three meetings, although it appears that fewer cuts are in
store for 2025. After a relative lull, reduced interest rates have resulted in
increasing hotel transaction activity which many perceive is poised to continue
to rise. Many anticipate discretionary sellers to be motivated by strong market
conditions and attempt to take advantage of opportunities to capitalize on
value, while numerous non-discretionary sellers will be compelled to
restructure or exit an investment out of necessity due to refinancing hurdles
and/or the need for capital to execute deferred product improvement programs
(PIP) that can no longer be delayed.
Bid–ask spreads are narrowing between existing sponsors and
new investors as an active transaction market provides market derived price
discovery.
Domestic and international hotel investors are generally
optimistic as U.S. hotel values during the near term are anticipated to rise.
Furthermore, many major urban markets such as New York City continue to benefit
from post-pandemic rebound of demand for lodging from corporate, group, and
leisure travelers.