Rick Sharga, EVP of Auction.com, credits a steady increase in travel for the large hotel representation. “With the return of tourism and business travel, the hospitality industry is gaining strength, and hotel revenues are increasing. CRE investors interested in the hospitality segment are using our online platform as a way to quickly and effectively buy and sell both traditional and distressed properties.”
GlobeSt.com was unable to reach Sharga prior to deadline to discuss how the increasing demand for hotel properties is impacting sale prices in the sector as a whole. However, Auction.com's recent success in auctioning the Fairfield Inn Orangeburg in Orangeburg, SC, highlights the trend toward higher hotel prices. The 64-key hotel was auctioned on July 17 and closed Sept. 15, selling for 130% of the seller's reserve price.
The US Department of Commerce reports that spending on travel and tourism increased by 9.1% during the second quarter, contributing to the increasing popularity of select-service hotels and investments for large REITs and private-equity firms, according to Auction.com. Recent reports indicate that as the lodging industry segment diversifies, transaction volume and competition for these types of assets have also increased.
Other notable closings from CRE sectors in September via Auction.com include: Woodville Gardens, a 333-pad mobile-home community on 54 acres in Loveland, OH; the Terraces at University Place, a 65,112-square-foot retail center in Charlotte, NC; and Landmark Center, a 345,335-square-foot office building in Jackson, MS.
As GlobeSt.com reported in October, as cap rates decline on class-A properties in core markets, many firms are turning to value-add opportunities to maximize yield, and hospitality sector is where many of these opportunities can be found. In Part 1 of a two-part interview, GlobeSt.com spoke with Bill Shopoff, chairman, president and CEO of Shopoff Realty Investments, which specializes in value-add investments, about this growing segment of the market and where it is heading. Shopoff said, “There are definitely value-add opportunities throughout the US, including in those cities that have been experiencing recovery for years. I think the office and retail sectors will have ample offerings to choose from, as well as hospitality, which is showing signs of recovery.”
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