Rob Koger, president of Molinaro Koger, a hotel brokerage firm based in Washington, DC, concurs that transaction volume for lodging properties has slowed. "There are not a lot of transactions occurring, and those that are occurring are being completed by all-cash buyers looking for good assets that are providing a strong yield," he says. "It's a function of the credit markets as well as concern about the overall economy."

Those deals that are being transacted are primarily single-asset trades under $25 million, Koger relates. "There are larger deals getting done, but they are not getting done with regularity," he says. "There are not many trophy assets on the market at this time. With the credit markets being tight, deals that have financing in place or that have seller financing have a much stronger chance of getting done in this environment."

In October, Molinaro Koger brokered the sale of the Hyatt Regency Orange County in Garden Grove, CA to Inland American Lodging Advisor Inc. Ashford Hospitality Trust was the seller. According to CB Richard Ellis, the 654-key property sold for $112 million. "It was good asset in a strong market with good cash flow, so it garnered pretty strong interest," recalls Koger.

Niehaus expects Q1 to witness a depressed transaction marketplace, but the pace should pick up as the year progresses. "It's going to be slow because there isn't enough in the pipeline for the first quarter to be anything real dramatic," he says. "But by the end of the first quarter, you will see evidence that the lenders are back into the game—they have to lend. So they are looking for deals to lend on and there's been a number that have been on hold. Then in the second quarter you are going to get some activity of people who have gone through the winter and it's been tougher than they thought and they get motivated to sell. So they get their properties on the market second quarter and hopefully get it closed second or third quarter."

At the same, buyers may be looking to buy in anticipation of an upswing in 2010. "You will begin to see buyers out there saying, 'I better buy now before prices go up.' So come third or fourth quarter they are going to be looking to buy," Niehaus says. "That's what could happen, but as with most forecasting you can probably add a quarter onto that, because I think it's going to take longer for people to get that positive. It's more likely it will be mid-2010 before we see things back to normal."

Koger is "optimistic" volume will pick up by midyear. "Our view is it can't get worse," he says. "It's been a slow year. We've been able to get a number of deals done, but certainly nowhere near the volume of 2006 and 2007. But we anticipate that changing toward the latter half of 2009 and look forward to participating in the market recovery as the market comes back."