The past year clearly reflects an inflection point relative to transaction activity of major US hotel transactions. The operating fundamentals of the lodging business are rebounding, and capital markets while not recovering as strongly, are clearly reviving, resulting in tremendous investor interest in the sector. US hotel transaction volume increased dramatically during 2010 compared with the record lows experienced during 2009. Large volume institutional equity capital has been formed through both new public hotel REIT issuances and secondary offerings for established hotel REITs. With the recent run-up in hotel values in many markets, due in part to lenders “kicking the can down the street,” equity positions that were previously—theoretically—wiped out during the recent downturn, are now back in the money.

LW Hospitality Advisors (LWHA) continuously monitors the major US hotel sale transaction market. The LWHA 2010 Major US Hotel Sales Survey includes 84 single asset sale transactions over $10 million each that are not part of a portfolio allocation. These transactions totaled close to $5 billion, and include 24,000 hotel rooms with an average sale price per room of approximately $200,000.

Notable observations from the LWHA 2010 Major US Hotel Sales survey include: