NEW YORK CITY—2015 was a banner year for the USlodging industry. Sector fundamentals have neverbeen stronger, and at this juncture hotel property values havegenerally exceeded prior peak levels in most markets across thecountry.

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Mergers and acquisitions of individual hotels, portfolios, andcorporate consolidations occurred at a blistering pace reaching acrescendo with the late year announcements of MarriottInternational's blockbuster acquisition ofStarwood Hotels & Resorts Worldwide, Inc.,Accor SA's purchase of FRHI HoldingsLtd which includes Fairmont,Raffles and Swissôtel, andHilton Worldwide Holdings' plan to separate itsreal estate assets into a publicly traded entity. One prevailingtheory is that hotel operating and real estate companies arebulking up to defend themselves against the growing heft of onlinetravel agencies such as Expedia Inc. and againstcompetition from home-rental companies such as AirbnbInc. M&A activity has also been fueled by the factthat although stellar industry operating performance achievedduring 2015, for the most part during the latter half of the yearpublically traded hotel REITs experienced adecline in enterprise value and have been effectively relegated tothe sidelines of the acquisition arena. The recent arbitragebetween public REIT share prices and the underlying value of theirproperties will lead to privatizations similar toBlackstone's year end acquisition ofStrategic Hotels & Resorts, Inc.

The LW Hospitality Advisors (LWHA) 2015 MajorUS Hotel Sales Survey includes almost 200 single assetsale transactions over $10 million, none of which are part of aportfolio. These transactions totaled roughly $14 billion, andincluded approximately 53,000 hotel rooms with an average saleprice per room of $265,000. By comparison, the LWHA 2014 Major USHotel Sales Survey identified 152 transactions totaling roughly $16billion including 45,000 hotel rooms with an average sale price perroom of nearly $350,000. Comparing 2015 with 2014, the number oftrades increased by more than 25 percent while total dollar volumedeclined roughly 12 percent and sales price per room decreased by24 percent. It is important to note that the 2014 data is skeweddue to the inclusion of the two extraordinarily large sales, namelythe $1.73 billion trade of the Cosmopolitan LasVegas and the $1.95 billion sale of the WaldorfAstoria in New York.

Forty major sales occurred in the State of California, followedby 36 in Florida, and 19 in New York. Sixteen major sales occurredin the New York City area, followed by 12 in Boston, 8 in SanDiego, 7 in Chicago, 7 in Miami/Miami Beach, and 6 in Orlando.