During the past several years, buyers have been eagerly looking for lodging assets in which to invest and have been acquiring hotel properties through whatever means were available: single-asset purchases, portfolios, as well as through mergers and acquisitions. Hospitality transaction momentum across the nation surpassed the records achieved in 2005 and 2006 in both volume and pricing. The first half of 2007 was characterized by ample availability of capital earmarked for hotel investments and private equity firms took full advantage, which resulted in enormous numbers of large portfolio transactions. Even in this current unstable period in the capital markets, hospitality pricing has remained surprisingly strong, evidenced by record-breaking prices coupled with low cap rates, albeit at a slowly increasing rate.

Currently, US capital markets are experiencing skittishness and a sense of uncertainty about the future. Some economists believe the US is about to enter an economic recession, others believe we are already experiencing the effects of negative real economic growth. Either way, the fundamentals for the US lodging industry remain positive and the outlook is for continued growth, albeit at declining levels. During the next several years, while the national hotel occupancy level is anticipated to remain relatively flat at roughly 63%, average room rates are expected to grow at roughly twice the rate of inflation.