Yet the New York Helmsley Hotel sold for $313 million. The Mark Hotel sold for about $1 million per room. The Westin in San Francisco is rumored to have sold for $172 million. I recently chatted with Alan Reay over at Atlas Hospitality and he confirmed my fears. “I would say [the hotel industry] is revisiting some of the mistakes that we’ve made prior. Which is that the prices today are being driven primarily by the cost of funds…people are not taking into consideration, if revenues are increasing, if we have pressure on wages, inflationary pressure, more hotels unionizing, the cost of PIPs that a lot of the major brands are coming down with…there are a lot of costs and risks associated in the hotel industry and I would say that that’s not really being factored into today’s prices.” He notes that some deals have such a low cap that “everything” has to go right to make it work. (For the record, Alan and I were speaking in general about the market and did not specifically mention any of the deals above.)

There is still a lot of distress out there. And from the people I chat with, room rates aren’t exactly aggressively driving north at a pace to match the swelling prices of trophy properties in gateway cities. I’m not implying that these particular deals are overleveraged, but the prices of name hotels are getting closer and closer to 2007…just as cap rates are squeezing tighter and tighter.

Can every sale play chicken with interest rate hikes? Certainly it’s possible that interest rates will never rise, but it’s not plausible. I fear that a portion of the hotel market is angling to have a boom and bust cycle before the rest of us get out of the first one.

They’re out on the balcony while everyone else is trying to turn down the music.