The current relatively high cost of debt has widened bid/ask spreads and clearly slowed investment volume. Additional noteworthy Q2 2023 observations include:

Fourteen trades or roughly 17 percent of the national quarter total occurred in the State of Florida, followed by nine sales or 11 percent of the national quarter in California, and Arizona with eight sales or 10 percent of the national quarter. Combined, thirty-one trades or 37 percent of the national quarter occurred in Florida, California, and Arizona.

Ryman Hospitality Properties, Inc. (NYSE: RHP) acquired from Blackstone the 1000 room JW Marriott San Antonio Hill Country Resort & Spa in San Antonio, TX for $800 million or $800,000 per unit.

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

The 250 key Nautilus Hotel in Miami Beach, FL was acquired by Service Properties Trust (Nasdaq: SVC) for $164.5 million or $661,000 per unit from Quadrum Global. The property, which is now managed by Sonesta International Hotels Corporation and subsequent to a major renovation to be completed in early 2025 is slated to be rechristened under Sonesta's The James brand.

Ohana Real Estate Investors acquired from Blum Capital Partners the 276 room Claremont Club & Spa – A Fairmont Hotel in Berkeley, CA for $163.3 million or approximately $592,000 per unit.

A joint venture between Gencom and GD Holdings, LLC acquired from Magellan Development Group, Ltd. the 192 room St. Regis Chicago for $133.5 million of $695,000 per unit. The trade represented the closing of a forward sale of a new hotel agreed upon during late 2020.

Norwich Partners sold the 144 key AC Hotel by Marriott Clearwater Beach and the 139 key Courtyard by Marriott Clearwater Beach for $113.7 million or $402,000 per unit to Mission Hill Hospitality.

Southwest Value Partners acquired from Fortress Investment Group the 575 room JW Marriott Tucson Starr Pass Resort & Spa in Tucson, AZ for $112 million or $195,000 per unit.

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

Examples of buyers include ARA US Hospitality Trust, Dauntless Capital Partners, Gencom, Hersha Hospitality Management, Ohana Real Estate Investors, Pyramid Global Hospitality, Magna Hospitality, McWhinney, Mission Hill Hospitality, Peachtree Hotel Group, Procaccianti Companies, Ryman Hospitality Properties, Service Properties Trust, Shaner Hotel Group, Southwest Value Partners, and Summit Hotel Properties, Inc.

Examples of sellers include American Hotel Income Properties REIT LP, Blackstone, Blum Capital Partners, Buccini/Pollin Group Inc., Chartwell Hospitality, Donohoe Hospitality Services, Pebblebrook Hotel Trust, Fortress Investment Group, Highgate, KKR & Co. Inc., Lam Generation, McSam Hotel Group, Norwich Partners, Peachtree Hotel Group, Quadrum Global, and Waterton Associates

Although U.S. hotel sale transactions continue to be consummated, activity is tepid due to the current disconnect between operating fundamentals and capital markets. Many trades are being made at opposite ends of the spectrum including trophy properties located in high barrier markets with strong cash flow, or assets that are underperforming and require immediate and meaningful capital investment. Generally, pricing of U.S. hotels remains steady and continues to offer favorable discounts to replacement costs which during the recent past have dramatically risen.

Instant Insights /

Inside the Decline of Hotel Transactions In Q2

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