June 12, 2018
U.S. hotel transaction volumes reached more than $11.9 billion in Q1 2018, a 93% increase over last year, according to research by JLL. Deal pace has been driven by South Florida and West Coast markets, including Hawaii, resort properties, and portfolios of prime full service hotels.
Transactional activity has been underpinned by the acceleration in performance growth. JLL reports cap rates sharpened further due to the high profile of assets transacted and ongoing strong investor sentiment, shaping the story for hotel deals during the quarter.
JLL’s Arthur Adler notes that since March, “Investor sentiment has markedly improved based on the widely-held belief that demand will outstrip supply for the foreseeable future, resulting in stronger pricing power and solid profit improvement.”
In 2017, JLL reported transaction volume was down about 15%, and the pickup in year-over-year activity is already evident in 2018. The industry is flooded with available capital for acquisitions. Yet, JLL points out two things are holding deal volume down: the lack of property coming to market, and the option to finance. That’s leading many owners to opt to refinance instead of sell.
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*Pictured Grand Wailea resort on Maui