Many Hotel Sellers Won Big in 2018
By Rodney G. Clough, Senior Managing Director at HVS
On average, hotel prices increased significantly in 2018, as a strong pool of buyers with favorable outlooks kept downward pressure on cap rates. A strong bidding environment for hotels, particularly those in markets where barriers to entry were high and PIPs had already been completed, kept prices strong, resulting in some big wins for hotel sellers that purchased their hotels at the right time during the last downturn.
- 106 hotels in the sample
- Overall total price increase of 34% for the 106 hotels, appreciating from $1.1B to $1.5B
- Average annual compounded price gain of 11% (16% for those hotels first purchased between 2009 and 2017)
- 85% of hotels sold for more than the prior sales price
We expect winners to outpace losers again in 2019. As my previous article discussed, metrics should remain favorable for much of 2019. If your hotel is coming off a strong 2018, as evidenced per the profit-and-loss statement, and you purchased your property during the 2009-2014 timeframe, now may be the time to sell, if not refinance.