Reay says prices will drop by 10% to 20% this year after falling30% last year. "We expect to see 150 to 175 transactions," theAtlas president says, up from 92 transactions in 2009, which wasthe lowest number of transactions in the more than 15 years thatAtlas has been tracking the state's hotel sales. The 92 sales in2009 compared with 187 transactions in 2008.

Distress is the chief factor driving the market right now, andReay says that where the sales figures go this year will depend toa large extent on what happens to the distressed properties. Thusfar, conventional lenders have been extending loans rather thanforeclosing, and special servicers of CMBS loans have been evenmore reluctant to foreclose.

"The lenders are delaying and working out forbearanceagreements, so the jury is still out on whether those propertiesare going to get extended and extended and will never come tomarket, or if one lender will start the foreclosure process andsell some assets, which would tend to make other lenders followsuit," Reay says. He doubts that lenders can continue to extendloans indefinitely because some of the hotel owners are going tothrow in the towel and hand back the keys to lenders, forcing theirhand.