Economic growth, record low unemployment, relative lowinflation, rising government spending, and tax reform have combinedto produce one of the longest periods of sustained growth ever inthe United States.  2018 was another record-breaking yearfor the U.S. hotel industry with new all-time high operatingmetrics including: annual occupancy, average daily rate, revenueper available room, room night demand, and available roomnights.  Results of the U.S. mid-term election are notlikely to produce any immediate government policy changes and theAmerican economy is now more than a decade into a growth cyclewhich has been slowing. Generally, investor sentiment appears tohave reached a fork in the road giving rise to some offering abearish outlook while others remain bullish.  Trade andtariff regulations remain a hot topic as the stock market hasrallied on news of a deal with China and/or NAFTA, and then hasplunged when the details of these agreements have been disclosed.External factors including Brexit, areas of global economicweakness, and declining oil prices represent underlying longer-termthemes. For now, the threat of rising interest rates appears tohave eased as the Federal Reserve System is reacting to signalslike a slowdown in the housing market and a relatively strongdollar. The government shutdown, which began on Saturday, December22, has begun to impact various lodging markets throughout thecountry.

The LW Hospitality Advisors (LWHA) 2018 Major US Hotel SalesSurvey includes 208 single asset sale transactions over $10million, none of which are part of a portfolio. These transactionstotaled $18.3 billion and included approximately 51,100 hotel roomswith an average sale price per room of $357,000. By comparison, theLWHA 2017 Major US Hotel Sales Survey identified 183 transactionstotaling roughly $13.6 billion including 51,000 hotel rooms with anaverage sale price per room of nearly $267,000.  Byfurther comparison, the LWHA 2016 Major U.S. Hotel Sales Surveyidentified 173 transactions totaling roughly $12.7 billionincluding 42,400 hotel rooms with an average sale price per room ofnearly $300,000.  Comparing 2018 with 2017, the number oftrades increased by approximately 14 percent while total dollarvolume rose roughly 35 percent and sales price per room increasedby 34 percent. Comparing 2017 with 2016, the number of tradesincreased by approximately 5 percent while total dollar volume roseroughly 7 percent and sales price per room declined by 11percent.

Notable observations from the LWHA 2018 Major U.S. Hotel SalesSurvey include:

• Eighty-six or 41% of the total number of 2018 sale transactionsoccurred in three states;

• With thirty-eight 2018 hotel sales, Florida has been the mostactive transaction market followed by California and New York withtwenty-five and twenty-three trades respectfully;

• Forty eight of the 208, or almost one quarter of 2018 U.S.hotel sale transactions, were for greater than $100 millioneach;

• Thirty of the 2018 hotel trades were between $100 and $199million.

• Eight of the 2018 hotel sales were between $200 and $299million;

• Xenia Hotels & Resorts, Inc. sold the 645-unit AstonWaikiki Beach Hotel in Honolulu, HI for $200 million or $310,000per room;

• A joint venture between Andrew and Peggy Cherng, founders ofPanda Restaurant Group, and investor Tiffany Lam acquired from MGMResorts International the 392 key Mandarin Oriental LasVegas for $214 million or $545,000 per room. The property is nowoperated by Hilton Worldwide as the Waldorf Astoria Las Vegas;

• Starwood Capital Group (SCG) acquired from the Los AngelesCounty Employees Retirement Association the 251-unit St. RegisPrinceville Resort & Makai Golf Club on the island of Kauai inHawaii for $225 million or roughly $900,000 per key. SCG intends toinvest more than $100 million to transform the property into the 1Hotel Hanalei Bay;

• At the very beginning of 2018, the 805-unit Fairmont San Jose,CA sold for $233.5 million or $277,000 per room;

• Brookfield Asset Management acquired the 339-unit PGA NationalResort & Spa in Palm Beach Gardens, FL for $233 million, or$687,000 per key from Walton Street Capital who procured theproperty in 2006 for $170 million, and purportedly spent $89million on renovations, for a total basis of $259 million;

• Extell Development Co. purchased the 405 room Four SeasonsResort and Club Dallas at Las Colinas for $235 million, or $580,000per unit from Blackstone who acquired the asset in 2014 for $150million from CW Capital Asset Management. The previous owner, whohad defaulted on a $175 million loan, had a reported basis of $290million in the property;

• A joint venture between Marriott International & TLGInvestment Partners & Concord Wilshire Capital, LLC acquiredthe 1000 room Sheraton Grand Phoenix, AZ for $255 million, or$255,000 per unit from the City of Phoenix. Phoenix spent $350million to build the hotel, which opened in 2008 and subsequentlythe City spent $47 million to cover operating losses.  Inaddition to selling the hotel at a loss, the Phoenix City Councilagreed to provide the new ownership with a $97 million in propertytax savings and the transfer of $13 million to use forrepairs.

• A joint venture between Ares Management LP, SMW Hospitality LLC(JV Square Mile Capital Management LLC & Wafra Inc.), &Trinity Real Estate Investments LLC sold to Blackstone the 297 keyRitz Carlton Kapalua on the island of Maui, HI for $275 million or$925,000 per room;

Four of the 2018 trades were for between $300 million and $499million;

• Host Hotels & Resorts, Inc. sold to Davidson KempnerCapital Management the 774-unit Westin New York Grand Central NewYork, NY for $300 million or $388,000 per key;

• The 395-unit Margaritaville Resort Casino Bossier City, LA soldfor a total of $376 million, or $952,000 per room with VICIProperties Inc. having purchased the land and real estate assetsfor $261 million and Penn National Gaming, Inc. having acquired theoperations for $115 million;

• Blackstone purchased the 740 room Arizona Biltmore Phoenix, AZfrom the Government of Singapore for $403 million, or $545,000 perroom;

• A joint venture which includes GFI Capital and ElliottManagement acquired the 729 room Parker New York hotel for $405million, or more than $550,000 per key from The Jack ParkerCorporation who originally developed and opened the property in1981;

Four of the 2018 trades were for between $500 million and $999million dollars;

• MSD Capital acquired the 426 room 1 Hotel South Beach for $500million, or roughly $1.2 million per key from a partnership thatincluded Starwood Capital Group, Invesco, and the LefrakOrganization;

• Gulf State of Qatar owned Katara Holding purchased NYC's iconic282 room Plaza Hotel for $600 million, or more than $2.1 millionper room from a partnership between Sahara U.S. Corp., AshkenazyAcquisition Corp., and Kingdom Holding Co. The sale marked thefinal chapter in a multi-year global saga surrounding the PlazaHotel's ownership;

• Blackstone acquired the 1,002 room JW Marriott San Antonio HillCountry Resort & Spa for $650 million, or roughly $650,000 perunit from a joint venture between Miller Global Properties &Principal Real Estate Investors that reportedly spent $565 millionto develop the project during the mid-2000's;

• A joint venture between Elliott Management and TrinityInvestments acquired from Blackstone, the 1,580 room JW Marriott& Ritz-Carlton Grande Lakes Orlando, FL for $900 million, ornearly $560,000 per unit;

Two 2018 hotels trades were for $1.0 billion and over;

• VICI Properties in a joint arrangement with Penn NationalGaming acquired the 400-unit Greektown Casino Hotel in Detroit, MIfor $1.0 billion or $2.5 million per room;

• Wind Creek Hospitality purchased the 302 rooms Sands CasinoResort Bethlehem, PA for $1.3 billion, or over $4.3 million perunit from Las Vegas Sands Corp;

Six U.S. hotel sales occurred at more than one million dollarsper room including:

• Cavallo Point: The Lodge at the Golden Gate Sausalito, CA –$1.1 million
• 1 Hotel South Beach Miami, FL – $1.2 million
• The Plaza New York, NY – $2.1 million
• SoHo House Chicago, IL – $2.4 million
• Greektown Casino Hotel Detroit, MU – $2.5 million
• Sands Casino Resort Bethlehem, PA – $4.3 million

Hotel centric investment entities that were active purchasersand sellers of lodging assets include:

• Blackstone;
• Braemar Hotels & Resorts Inc. (formerly known as AshfordHospitality Prime);
• Brookfield Asset Management;
• Hersha Hospitality Trust;
• Hyatt Hotels Corporation;
• MCR Development;
• Noble Investment Group;
• Pebblebrook Hotel Trust;
• Procaccianti Group;
• Rockbridge;
• Starwood Capital Group;
• Summit Hotel Properties;
• Wheelock Street Capital;
• Woodbine Development, and
• Xenia Hotels & Resorts, Inc.

During 2018, an abundance of capital fueled robust activity withlodging sector mergers, acquisitions, and spinoffs. Significant transactions included:

• Pebblebrook Hotel Trust's $5.2 billion takeover of LaSalleHotel Properties;

• Hyatt Hotels Corporation acquisition of Two RoadsHospitality;

• AccorHotels purchase of Mövenpick Hotels & Resorts;

• Spin-offs of La Quinta Holdings Inc. (NYSE: LQ) with the LaQuinta hotel brand and management business acquired by WyndhamHotels and Resorts (NYSE: WH) and the creation of CorePoint LodgingInc. (NYSE: CPLG), a publicly-traded real estate investment trust(REIT) with more than 300 LaQuinta affiliated properties situatedthroughout the U.S., and;

• LVMH Moët Hennessy Louis Vuitton SE's $3.2 billion acquisitionof hotel and leisure company Belmond Ltd.

Foreign investment in U.S. commercial real estate includinghotel properties has been robust, as America continues to be thelargest recipient of overseas direct investment in theworld.  Expansion in the U.S. economy has outpaced that ofother nations, and investment risk here is relatively low incomparison to other nations.  In addition, the U.S. offershigher returns as well as liquidity, which provides foreigninvestors the ability to exit relatively quickly if they choose tomove capital.