Last year was the most active year for hotel transactions since 2007, according to the new Hotel Transaction Almanac by STR’s Consulting and Analytics office and Hotel Brokers International. The transactions included the record-setting sale of the Waldorf Astoria Grand Wailea in Hawaii.
In 2018 there was a total of 707 property sales worth $29.5 billion and the total number of transactions grew 25 percent from 2017. Sales volume also recorded an increase of 49 percent than the previous year.
“We’re near the peak of the cycle right now where there is opportunity for very large profits,” said Joseph Rael, STR’s senior director of consulting and analytics. “Buyers feel that they can pick up strong short-term returns and gain an asset in an attractive market, while owners like the large valuations with economic uncertainty on the horizon.”
The Waldorf Astoria Grand Wailea was sold for $1.1 billion, making it the second all-time largest transaction among individual sales included in the almanac. Washington, D.C. became the most active market with 27 transactions at an average price per room of $265,000 while Atlanta ranked second with 23 sales.
The Soho House Chicago with $2,375,000 and the Plaza hotel in New York with $2,127,660 recorded the highest transaction based on price per room. The price per room for these two transactions are the top two in the almanac’s history.
Sales to foreign investors more than doubled from 32 in 217 to 72 in 2018. Acquisitions with known buyers also saw growth to 26 percent from 2017’s 18 percent. Private-equity firms also saw the greatest growth in 2018 with 114 transactions.
“We expect less transaction activity in 2019 with asset pricing similar to the levels form 2018,” Rael said. “Strong projected operating fundamentals should be balanced by increased rates and broader economic concerns.”
Earlier, a report from HVS Consulting and Valuation predicted a strong and positive outlook for transaction activity in 2019 but warned it won’t be quite at the level seen in 2018.