NEW YORK CITY—2015 was a banner year for the US lodging industry. Sector fundamentals have never been stronger, and at this juncture hotel property values have generally exceeded prior peak levels in most markets across the country.

Mergers and acquisitions of individual hotels, portfolios, and corporate consolidations occurred at a blistering pace reaching a crescendo with the late year announcements of Marriott International's blockbuster acquisition of Starwood Hotels & Resorts Worldwide, Inc., Accor SA's purchase of FRHI Holdings Ltd which includes Fairmont, Raffles and Swissôtel, and Hilton Worldwide Holdings' plan to separate its real estate assets into a publicly traded entity. One prevailing theory is that hotel operating and real estate companies are bulking up to defend themselves against the growing heft of online travel agencies such as Expedia Inc. and against competition from home-rental companies such as Airbnb Inc. M&A activity has also been fueled by the fact that although stellar industry operating performance achieved during 2015, for the most part during the latter half of the year publically traded hotel REITs experienced a decline in enterprise value and have been effectively relegated to the sidelines of the acquisition arena. The recent arbitrage between public REIT share prices and the underlying value of their properties will lead to privatizations similar to Blackstone's year end acquisition of Strategic Hotels & Resorts, Inc.