Hotel Deals Get Even Hotter
Hotel valuations will jump over the next 12 months, and transactions increase up to 20%, according to the annualLodging Industry Investment Councilsurvey. HREC CEO Mike Cahill, who co-chairs the think tank, says they'll be fueled by the low cost of capital and strong fundamentals.Full-service, upper-upscale properties will see the biggest jump, followed byupscale, select-service hotels. In fact, 98% of respondentsall movers and shakers in hotel capitalpredicted the value rise, with 64% estimating a robust 5% to 10% increase.
Above, the luxury, 247-room Hutton Hotel in downtown Nashville, which Carey Watermark Investors announced yesterday that it acquired for$74M.The problem is that theres still not enough desirable product on the market to meet investor demand, Mike says; hopefully valuations will encourage putting more hotels to market. What concerns respondents: markets with large government presence, as sequestration and furloughs may impact hotel performance; and uncontrollable increases in operating costs due to unionization and healthcare. Mikes also happy to see another market come back: collectibles. Hes an avid late-1880s US currency collector; his favorites are the 1896 educational notes, which look like artwork.