CHARLOTTESVILLE, VA—The number of hotel deals has declined thisyear compared to transactions during the same period in 2013,SNL Financial reports. In addition, the deal valuehas dropped. It is unclear what the drivers are behind thistrend-or even if it is a trend at all, as appetite by hotel REITsfor assets remains strong and the year could end with strongnumbers.

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One reason behind the drop in deal value, though, may relate toa growing demand by companies for select-serviceassets, as they are percevied to deliver better value.

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First, though, a look at the numbers.

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SNL Financial reported that, as of June 13, there have been 24hotel acquisitions so far this year, for a total of $1.26billion. That compares with 32 acquisitions in the sameperiod in 2013, totaling $1.42 billion, for a 25%decrease and an 11.3% decrease in total deal value.

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Appetite for additional acquisitions this year appears strong.To cite a few examples, RLJ Lodging has said thatit is eyeing West Coast expansion after its $313 million, 10-hotelportfolio purchase from Hyatt Hotels Corp. in March. Then there isHost Hotels & Resorts CEO EdWalter, who noted during a Feb. 19 earnings call that heexpects to be active in transactions this year. According to a May1 Form 8-K, the REIT expects that acquisition capital expenditureswill total $30 million to $35 million for 2014.

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But the majority of statements by REIT executives tend toreflect the caution exhibited by Sunstone CEOKenneth Cruse in a recent earnings call: "Wecertainly see no signs of this cycle letting up, but at this pointwe need to be even more careful and selective about how we identifyand execute on acquisitions."

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One very recent trend has been the greater demand forselect-service hotels. According to a BloombergBusinessweek report, Blackstone Group LP isreportedly close to an agreement to buy a group of select-servicehotels from Clarion Partners LLC for about $800million Another example is the joint venture betweenNorthStar Realty Finance and ChathamLodging Trust to buy 47 limited-service hotels for $933.9million. Towering above these transactions is AmericanRealty Capital Hospitality Trust's $1.93 billion purchaseof a group of 126 limited-service properties.

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Summit Hotel Properties is also eyeing theseassets. "While we continue to see a steady pipeline of potentialacquisitions, we remain extremely selective in targeting only theright hotels that fit our long-term growth objectives," said CEODaniel Hansen in the company's first-quarterearnings call. "We have several potential acquisitions in variousstages of due diligence and remain focused of the highest quality,premium select service assets that will provide strong in-placeyields and create long-term value."

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