Hotel capitalization rates, defined in for purposes of this discussion as the ratio of a hotel’s net income to its sales price, have bottomed out, as rates of return remain at record low levels and NOI upside has begun to subside. This article updates hotel capitalization and discount data that was presented in a previous article on hotel capitalization rates (see: Allure of Hotel Investment Expected to Moderate Rise in Capitalization Rates as Rebound Takes Hold, Jan 19, 2005, by Suzanne Mellen, in the Library at ) Since 1988 HVS International has been tracking overall “going‐in” capitalization rates, free and clear discount rates and equity internal rates of return for hotels that sell at the time of our appraisal. The following chart sets forth the trend in these rates of return.

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