"We had a booming economy in 2000," he explains. "We are going through a correction now, just like the economy as a whole. For example, with New York finishing last year with an occupancy in excess of 83%, even if 2001 ends up 10% lower, which is highly unlikely you would still have a hotel market achieving 75% occupancy, which is considered a solid performance by the industry."
He notes refinancing trends and the current increase in vacant rooms, but says not to worry. "Typical investors purchase hotels in these types of locals to hold them for 5 to 10 years," he says. "Markets such as New York, San Francisco, Washington, DC and Boston are anticipated to remain relatively strong." He adds, "Over supply has tended to have much more of an impact on occupancy rates than lack of demand caused by a temporary downturn in the economy.
"Look at Boston," he adds. "Occupancy is in the mid-70s and supply is relatively under control. The San Francisco metropolitan area has felt the dot-com crash, but it's a very strong market over the long term due to the high barriers to entry for new product. There have been pockets of overbuilding in some sub markets of cities such as Philadelphia, Chicago, Phoenix and Dallas, but I would not describe an particular metropolitan market as overbuilt."
Lesser points to a list of "the most significant US hotel sales" this year that C&W has compiled. The top ten of these are located in Maui, HI; New York, NY; Pittsburgh, PA; Austin, TX; Arlington, VA; Orlando, FL; Baltimore, MD; and Holtsville, NY.
The most expensive property on the list was the Kea Lani Resort in Maui, HI and sold at an estimated $250 million to Fairmount Hotels & Resorts. The seller was Trinity, Apollo and Whitehall. The sale breaks down to about $555,556 per room with 450 rooms. Next, Koksai Jidosha sold the Hyatt Regency Maui for an estimated $230 million and went to the Blackstone Group. The third runner up was in Manhattan. The Rhiga Royal Hotel Group sold the Rhiga Royal Hotel for an estimated $193 million to Thayer Hotel Investors.
The fourth largest sale was again in Maui with Marriott International's sale of the Ritz Carlton Kapalua to Capital Hotel Investments LLC for an estimated $144 million. The Carlyle Hotel in Manhattan sold for an estimated $130 million. The seller was Carlyle Ventures and the buyer was Maritz, Wolff & Co. The next largest was the Barbizon Hotel also in Manhattan for an estimated $96 million with it going to the Berwind Property Group from Ian Schrager Hotels/North Star Capital Group.
The seventh slot goes to the Westin William Penn in Pittsburgh, PA at $63 million having been sold to Omni Hotels from Lodgian Inc. The eighth place is a tie between the sale of the Austin Marriott in Austin, TX and the Doubletree National Airport in Arlington, VA. Value Enhancement Fund IV bought the Austin hotel for an estimated $50 million from USAA Real Estate. Lend Lease Real Estate bought the Arlington hotel for an estimated $50 million from Arlington Hotel Co.
Ninth place was also a tie between hotels in Orlando, FL and Baltimore, MD. The Hotel Royal Plaza @ Disneyworld in Orlando was bought for an estimated $47 million. The buyer was Fine Hotels and the seller was Prudential Real Estate Investors/Heller Financial. Radisson/Olympus Capital Partners bought the Hilton Baltimore and Towers from Prudential Real Estate Investors also for an estimated $47 million. The tenth largest deal was the sale of the Best Western MacArthur Hotel in Holtsville, NY for and estimated $21.8 million.
GlobeSt.com stories covering these sales can be found in the archives or through a keyword search.
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