-Nine major US hotel sale transactions greater than $100 million have occurred so far this year, compared with only five which were consummated during each of the past two calendar years;

-Public companies dominate the acquisition landscape. Newly formed Pebblebrook Hotel Trust has been the most acquisitive with five major US hotel purchases, followed by the four acquisitions made by LaSalle Hotel Properties, and three consummated by Diamondrock Hospitality Co. Other active hotel centric public companies include: Sunstone Hotel Investors, Inc., Host Hotels & Resorts, Hersha Hospitality Trust, FelCor Lodging Trust, Chesapeake Lodging Trust, and Chatham Lodging Trust;

-Private equity groups exclusively focused on the hotel sector such as RLJ Companies, HEI Hotels & Resorts, Noble Investment Group, and Apple Nine Hospitality, are also actively deploying capital to acquire US lodging assets

-Active sellers of major US hotel properties who have elected to transact in a rising market to monetize gains and/or for capital recycling include: HEI Hotels & Resorts, Tishman Hotel & Realty LP, and LaSalle Hotel Properties;

-Brand hotel companies such as Starwood Hotels & Resorts Worldwide Inc., Hyatt Hotels Corporation, Fairmont Hotels & Resorts, and Intercontinental Hotels Group PLC are also taking advantage of a more fluid market and continue to transition out of owning hotel assets while securing long term management agreements;

-Rapid price appreciation is evident by Chesapeake Lodging Trust’s $68 million acquisition of the Boston Marriott Newton. A joint venture between Procaccianti Group, Charles River Realty Investors LLC, and Rockpoint Group LLC previously acquired the asset in June 2009 from Host Hotels & Resorts for $29 million and subsequently executed a $14 million renovation for a total basis of $43 million. The recent trade of the hotel represented a gain of roughly 60% in one year’s time;

A record high sale price per room was recorded in Philadelphia with LaSalle Hotel Properties $493,000 per room acquisition of the Westin Philadelphia from HEI Hotels & Resorts.

So far this year, the majority of major US hotel sales have transacted at pricing levels below replacement cost. Furthermore, an increasing number of lenders holding troubled hotel debt are selling their positions to opportunistic investors. With recent, severely diminished capital expenditures at many of the nation’s hotels, scores of assets now face the challenge of “brand” hotel companies becoming stricter in enforcing their standards, which will ultimately stimulate deal flow.

The economic fundamentals of the US hotel industry continue to recover from last year’s bottom, as corporate and leisure travelers return to the road. Stockpiled hotel investment capital has recently been deployed, predominantly focused on core urban, 24/7, high barrier entry markets, and along US coastal locations. High quality hotel assets in top performing U.S. cities have slowly come to market and attracted enormous interest from a myriad of national and overseas investors.

For those investors who believe inflation is in our future, hotel investments represent a terrific hedge as room rates are continuously re-priced. At this point in the cycle, long term investment in US hotels will provide superior risk adjusted returns, however, investing in lodging assets today includes challenging near term risks. A prolonged national economic malaise would weigh on travel demand and exert negative pressure on room rates. External shocks such as terrorism and/or outbreak(s) of war could temporarily reduce travel, similar to what immediately occurred after 9/11. Those financiers willing to assume the near term risks associated with hotel investment will be handsomely rewarded if a quicker than expected economic recovery occurs, as this would invariably accelerate growth in lodging demand, room rates, profits, and resultant values.

To view CBRE's 2010 Q3 Hotel Sales report, click on the pdf. below.

Daniel Lesser is the senior managing director of the Hospitality & Gaming Group at CB Richard Ellis (CBRE) based in New York City. The views and opinions expressed in this article are the author's own.