Research - OCTOBER 28, 2014

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Hotels bounce back in Q3

by Reg Clodfelter

Third quarter 2014 not only saw the highest quarterly U.S. hotel transaction volume since 2007 at $8.5 billion, up 30 percent year-over-year, according to Real Capital Analytics, but the hotel sector was also the leading property type in the NCREIF Property Index for the first time since the beginning of 2011, edging out the industrial sector’s 2.92 percent return by 1 basis point at 2.93 percent.

The fourth quarter could see a new post-GFC high as well, considering there are already $7.8 billion in U.S. hotel transactions currently pending, according to RCA. Furthermore, average prices per unit are up, and in both the limited and full-service sectors, prices per unit have reached their highest point since 2008, according to RCA.

The sector’s momentum is still new, and its rolling four-quarter return on the NPI is the lowest of any of the major property types at 8.88 percent, well behind the index-leading 13.09 percent return for the industrial sec

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