The 2004 volume shattered the previous record set in the 1997 and 1998 boom years, according to Jones Lang LaSalle Hotels. Last year's deals saw 109,600 rooms change hands at an average price of $117,991 per key. The average capitalization rate for 56 deals where income data was available was 7.1%.
"The appeal of hotels as an asset class and subsequent strength in capital market activity is due to a combination of factors: a strong economic and lodging industry recovery picture, particularly compared to other real estate sectors; low, albeit rising, interest rates and a highly competitive debt market, which has resulted in dramatically improving spreads; the number and diversity of buyers, including off-shore investors; and an increasing interest by owners to bring properties to market," says Jones Lang LaSalle Hotels chief executive officer Arthur Adler. "We predict a sustained level of transaction activity in 2005, in the magnitude of $9 billion, or even higher if major portfolio acquisitions occur again."
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