BOULDER, Colorado—In accordance with the turnaround in industry performance, the hotel investment sector also exhibited strong signs of recovery with a large amount of activity, solid pricing, and better access to financing.
Through the end of 2011, STR Analytics, sister company to the Hotel Investment Barometer, tracked approximately US$14 billion in hotel transactions. This compares to US$8.6 billion in 2010. The average price per unit increased 11.7% from US$179,000 in 2010 to US$200,000 in 2011. The properties that generated the highest price per key are shown below.
| Property | Location | Rooms | Price | Price/room | Buyer |
| Ocean House | Watch Hill, Rhode Island | 49 | US$36.6 million | US$746,939 | Ocean House Hotel Partners |
| Mondrian Los Angeles | Los Angeles | 237 | US$137 million | US$578,059 | Pebblebrook Hotel Trust |
| Huntington Hotel | San Francisco | 100 | US$53.5 million | US$535,000 | Grace International |
| Royalton | New York | 168 | US$88.2 million | US$525,000 | FelCor Lodging Trust |
| Elysian Chicago | Chicago | 188 | US$95 million | US$505,319 | Equity Group Investments, Hilton Worldwide |
| Viceroy Santa Monica | Santa Monica, California | 162 | US$80.1 million | US$494,444 | LaSalle Hotel Properties |
| Algonquin | New York | 174 | US$85.5 million | US$491,379 | Cornerstone Real Estate Advisors |
| Cheeca Lodge | Islamorada, Florida | 214 | US$102 million | US$476,636 | Northwood Investors |
| Radisson Lexington | New York | 712 | US$335 million | US$470,506 | DiamondRock Hospitality Company |
| Paramount | New York | 597 | US$275 million | US$460,637 | RFR Holding |
Source: STR Analytics, LW Hospitality Advisors
A quick observation of the hotels listed above shows all of these hotels are at least quasi-independent and many of them are boutique in nature. The majority of them also are from primary urban markets: New York, Los Angeles, San Francisco, and Chicago. New York accounted for US$2.6 billion in asset trades, roughly 20% of the annual deal volume. The highest priced transactions shown below illustrate investors’ appetite for New York product. The Manchester Grand Hyatt in San Diego is the only non-Manhattan asset on the list.
| Property | Location | Rooms | Price | Price/room |
| Manchester Grand Hyatt San Diego | San Diego | 1,625 | US$570 million | US$350,769 |
| New York Palace | New York | 899 | US$400 million | US$444,939 |
| Park Central | New York | 934 | US$396.2 million | US$424,197 |
| Radisson Lexington | New York | 712 | US$335 million | US$470,506 |
| Yotel | New York | 669 | US$315 million | US$470,852 |
| Helmsley New York | New York | 775 | US$313.5 million | US$404,516 |
| Paramount | New York | 597 | US$275 million | US$460,637 |
Source: STR Analytics
Dealing There also were numerous portfolio transactions in 2011 that occurred. These included: the Cheng family’s US$570-million acquisition of five Rosewood properties; Cerberus Capital and Chatham Lodging Trust’s US$1.02-billion acquisition of the Innkeepers USA Trust portfolio; and Hyatt Hotels Corporation’s US$660-million LodgeWorks purchase.
REITs acquired approximately 30% of the hotels transacted in 2011. This is a slight decline from 2010 when almost 40% of the hotel transactions involved REIT buyers.
While US$14 billion in property sales is fairly significant, it is still well below the peak of the investment market in 2006 when more than US$20 billion in hotel assets traded. Nevertheless, the deal volume in 2011 is similar to the level between 2004 and 2005 when we were in the midst of an economic recovery.
Many analysts and brokers expect deal volume will maintain its current pace, and we can expect another US$14 billion in hotel transactions in 2012. However, history would indicate deal volume can be expected to increase further in 2012.