US hotel transactions surged in Q3, largely due to merger and acquisition activity such as Chinese investor Anbang’s purchase of Blackstone Group’s Strategic Hotels & Resorts. The sector continued to stabilize in spite of slowing RevPAR growth and a lack of supply, JLL reports. Below are five noteworthy themes from the industry in Q3.

1. RevPAR Down Year-To-Date

Revenue per available room (RevPAR) for US hotels softened year-to-date, down 3.2% in Q3 compared to the year-ago quarter. But despite the decline, JLL notes that occupancy rates continue to hover near historic highs, driven by average daily rate gains.

Of the top 25 markets in the country, Houston, New York and Miami are still experiencing negative RevPAR growth due to increased supply and low energy prices. Denver, Phoenix and Philadelphia saw improved performance—particularly in Philadelphia, which now ranks fifth in RevPAR growth, thanks to the Democratic National Convention.

2. Increased Supply

Hotel rooms under construction have ticked up in the past 12 months, increasing to 3.5% of the existing room supply. Though these gains are anticipated to slightly hinder national RevPAR growth in the future, supply is expected to remain below 2%. 70% of hotels under construction fall within the select-service category, and investors expect this category will see positive RevPAR growth in 2017. New York holds steady with the greatest supply in the country, with Denver and Seattle close at its heels, leading the nation in accelerated supply.

3. Major M&A Consolidation

There was major industry consolidation in Q3, among both big companies and smaller brands. Chinese regulators finally gave Marriott International and Starwood Hotels & Resorts’ $13.6B merger the green light, pushing Marriott to 30 brands spanning 5,700 hotels. Then there’s the Accor deal—Accor shelled out $2.9B in shares and cash to buy FRHI Holdings, the owner of the Fairmont, Raffles and Swissôtel brands, to boost its luxury hotel business.

4. Hotel Transactions Up In Q3

Transaction volume soared to $10.5B in Q3, compared to Q2’s $5.6B in deals. Activity was driven by Strategic Hotels & Resorts' $5.5B sale to China’s Anbang Insurance, though several prominent single-asset transactions closed during the period. Smaller deals included the sale of Andaz Fifth Avenue for $250M, Homewood Suites New York Midtown for $167M and Hilton Minneapolis for $143M.

5. Marginal Cap Rate Increase

JLL data shows the average cap rate plateaued at 7.5% in 2014 and inched up to 7.6% last year. From September 2015 to September 2016, cap rates rose 30 basis points to 7.7%, a reflection of the industry’s stable transaction volume and the possible increase in the federal funds rate. JLL projects cap rates will increase by small margins in 2017 depending on stabilizing fundamentals and interest rate increases.