"Not withstanding that, investors are almost like race horses at the starting gate," he says. "They want to run, they're just waiting for the gates to open. Bidding activity has been very active, yet it's very difficult to value properties in this market."

Potential investors run the gamut from real estate investment trusts, private equity, owner/operators, some institutional capital, high-net-worth individuals and offshore money. "They are starting to dip their toe in the water," Adler states.

Meanwhile, the Lodging Industry Investment Council recently released its top 10 list of opportunities and challenges culled from the responses of investors, lenders, corporate real estate executives, REITs and public hotel company leaders, brokers and equity sources. When asked if they would invest in hotels today, 41% said they planned to acquire REO assets directly from lenders, with an equal numbers seeking to acquire notes. However, 92% of investors related that they had not closed a deal in 2009.

Michael Cahill, CEO of HREC and co-chairman of LIIC, says that his firm is currently marketing 55 properties for sale. "The problem is they are very difficult to close right now," he finds. "A lot of people are waiting for the official bottom to come. There's a lot of uncertainty, and operating fundamentals continue to decline. A lot of people don't want to buy a hotel and then have the revenue go down another 10% after they buy it."

However, Cahill reports that his firm has seen an uptick in activity in the past four weeks with six new deals put under contract. "A lot of buyers are just now starting to jump in, saying, I might not be able to time it perfectly but we must be as close to the bottom as we are going to get."

Chances are, they will have a sizable number of properties to peruse. Predictions are that between 2,000 and 5,000 hotels may end up in the hands of lenders. "Most lenders, especially special servicers, are not the business of owning, renovating and operating hotels," Cahill says. "They are in the business of loaning money, and those people will put those hotels on the market."

Overall, this year's LIIC survey was marked by an overriding sense of uncertainty, Cahill says. Using a baseball metaphor, 61% of the respondents said the industry is in the first inning of a new hotel investment cycle. Meanwhile, 39% stated they are unsure if the industry has either reached the bottom of the previous cycle or if it has already made it through the first inning. Moreover, 44% predict the recession will end in nine months, with 56% saying it will continue for up to 18 months.

"The question is, are we redefining what innings mean?" Cahill wonders. "Is there an operational cycle versus a real estate finance cycle? There was a higher degree of variability in the answers this time than ever before and it says people are uncertain."

Yet Cahill is certain of one thing—if an investor can cobble together the debt and equity, the next 12 to 18 months will present a plethora of great buying opportunities because of drastic price declines and the sheer volume of properties that will go on the auction block.

"Five years from now," he says, "the guys who bought this year and next year are going to be selling their hotels for two to three times the purchase prices."