US Capital Trends | Hotel Report from RCA
2018 experienced a rebound in hotel deal activity. At $42 billion, volume was up to the 3rd highest annual pace on record. This was a 50% increase YOY volume change from 2017. The growth in deal volume in 2018 was not driven by one big portfolio or entity level deal. According to RCA’s US Capital Trends | Hotel 2018 report, this “…suggests that buyers and sellers have come to a better understanding of where assets should by price following this transition period.”
The acquisition of LaSalle Hotel Properties by Pebblebrook Hotel Trust was a large entity-level deal, however, these types of transactions were not the only source of growth in deal volume. The largest source of growth (dollar volume perspective) was from portfolio deals (up $8.5 billion from 2017). Again, this was not driven by one specific portfolio sale. Single asset sales volume expanded at 9% YOY in 2018, the second highest annual level on record behind growth in 2015.
Hotel property prices grew a modest 1.6 % for the year. This small growth in price was enough to push prices up for the year to a level higher than the previous peak level prices set in 2007.
Looking at the Pacific Northwest – Seattle, Washington ranked number 17 in the Top 25 Markets with $636.5 million in hotel sales volume (a 41% YOY increase from 2017). This includes 29 property sales, a -3% change from 2017. The average price per unit was $206,014 and the average cap rate was 7.6%.
Portland, Oregon did $390.6 million in hotel sales volume (a 953% increase from 2017). This includes 11 properties, a 120% increase from 2017. The average price per rooms was $211,015 and the average cap rate was 8.1%.
Read the full report: US Capital Trends | Hotels 2018