The LWHA Q1 2023 Major U.S. Hotel Sales Survey includes 83 single asset sale transactions over $10 million which totaled nearly $3.5 billion and included approximately 12,500 hotel rooms with an average sale price per room of $279,000.

In comparison, the LWHA Q4 2022 Major U.S. Hotel Sales Survey included 105 sales that totaled just over $4.0 billion and included approximately 15,100 hotel rooms with an average sale price per room of $268,000. Comparing Q1 2023 with Q4 2022, the number of trades decreased approximately 21 percent while total dollar volume decreased roughly 13 percent and sale price per room increased roughly 4 percent.

By further comparison, the LWHA Q1 2022 Major U.S. Hotel Sales Survey included 128 single asset sale transactions over $10 million which totaled $7.9 billion and included approximately 26,000 hotel rooms with an average sale price per room of $306,000. Comparing Q1 2023 with Q1 2022, the number of trades decreased approximately 35 percent while total dollar volume decreased roughly 56 percent and sale price per room decreased by roughly 9 percent.

The current relatively high cost of debt has widened bid/ask spreads and clearly slowed investment volume, a phenomenon which is anticipated to continue through at least Q2 2023. Additional noteworthy Q1 2023 observations include:

Eighteen trades or roughly 22 percent of the national quarter total occurred in the State of Florida, followed by fourteen sales or 17 percent of the national quarter in California. Combined, thirty-two trades or 39 percent of the national quarter occurred in Florida and California.

A joint venture between Credit Suisse Asset Management and Trinity Fund Advisors LLC acquired from Brookfield Asset Management Inc., the 1,000 room Diplomat Beach Resort Hollywood in Florida for $835 million or $835,000 per unit. The trade represents the third largest single asset hotel sale ever in the U.S.

Five Q1 2023 sales were consummated for between $100 million and $199 million each.

525 Lexington Avenue, the former 655 room New York Marriott East Side in New York, NY was acquired for nearly $154 million or $235,000 per unit by a joint venture that includes Hawkins Way Capital and Värde Partners. The hotel, which closed at the onset of the COVID-19 pandemic and remained so at the time of sale, was sold by Deka Immobilien Investment GmbH.

MCR acquired from Park Hotels & Resorts Inc. (NYSE: PK) the 508 room Hilton Miami Airport Blue Lagoon in Miami, FL for $118.250 million or approximately $233,000 per unit.

8300 Sunset Owner LLC, an entity reportedly controlled by Ian Schrager and Ed Scheetz acquired the former Standard Hollywood on Sunset Boulevard in West Hollywood, CA for $112.5 million or nearly $810,000 per unit. The hotel shuttered during the pandemic and remained closed at the time of sale.

Host Hotels & Resorts, Inc. (NASDAQ: HST) sold The Camby, a 277-room property in Phoenix, AZ for $110 million or $397,000 per unit to KHP Capital Partners. HST provided nearly $84.5 million or approximately 77 percent of the capital stack in seller financing.

Standard International acquired the 97 room SIXTY Soho hotel at 60 Thompson Street in New York, NY for $106.9 million or more than $1.1 million per key.

Institutional investment platforms, many of whom are lodging centric, dominated the Q1 2023 hotel transaction arena.

Examples of buyers include Concord Hospitality, Delaware North, DelMonte Hotel Group, Electra America Hospitality Group, Key International, KHP Capital Partners, Magna Hospitality Group, Navika Capital Group, Peachtree Hotel Group, Quadrum Global, and Trinity Fund Advisors LLC.

Examples of sellers include Blackstone Real Estate Income Trust, Inc., Brookfield Asset Management Inc., Highgate, Host Hotels & Resorts, Inc., NewcrestImage, Park Hotels & Resorts Inc., and Pebblebrook Hotel Trust.

Although the conflict in Ukraine endures, and what appears to be a never-ending anticipation of impending economic recession now looming large, the overall outlook for the U.S. lodging industry appears positive. Fundamentals vary depending on segmentation and geography, which should be considered when analyzing national averages. During the near term, additional supply will remain tepid as new development continues to be muted due in part to relatively high material and labor costs coupled with limited construction financing, all of which place negative pressure on financial feasibility.

Instant Insights /

Hotel Trades Drop in Q1 While Sales Price Per Room Rises

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