Hotel investors spent $27.8 billion on property acquisitions and developments in the United States throughout 2014, based on the Hotel Transaction Almanac and the Hotel Development Almanac compiled by STR Analytics.
During the 12 months, $18.5 billion in motels modified arms whereas one other $9.3 billion in new hotel initiatives opened their doorways.
“Hotel real estate remains very attractive to investors,” stated Steve Hennis, director at STR Analytics.
“Strong fundamentals in recent years, specifically robust demand levels and manageable supply growth, have created a very appealing environment for hotel industry stakeholders.”
The Westin Diplomat in Hollywood, Florida, garnered the best acquisition value final 12 months at $535 million.
The costliest growth undertaking was the Marriott Marquis Washington, DC, which price $520 million.
The common value per room for acquisitions rose to $219,000, a 15.3-percent enhance over 2013.
The whole funding for acquisitions, which incorporates extra capital for property-improvement-plan necessities, deferred upkeep and repositioning, elevated to $249,000 per room.
For new hotel initiatives, the typical price of development in 2014 was $186,000 per room, illustrating the premium consumers are paying for established, cash-flowing property.
“We have reached a point in the real estate cycle where high prices are making many investors shift their focus to new construction in order to grow their portfolios,” Hennis stated.
“STR’s pipeline shows more than 90,000 new hotel rooms slated to enter the market in 2015, a 50 per cent increase over the 63,000 rooms that opened in 2014.”
Some key findings from the 2015 Hotel Development Almanac and the 2015 Hotel Transaction Almanac:
The Hotel Transaction Almanac is an summary of historic traits in US deal quantity and pricing.
It contains combination breakdowns by area, property class and site kind for quite a few key metrics.
The Hotel Transaction Almanac combines STR Analytics’ in-house transaction database with that of information companion Hotel Brokers International to create a complete hotel transactions report.
The report additionally contains valuation parameters together with value per key, room income multiplier, extra capital invested, cap price and monetary phrases together with rates of interest and loan-to-value ratios.