After a period of caution, buyers are looking to hotels again. Despite lingering challenges facing the lodging sector, investors are showing no signs of backing off, reported Marcus & Millichap.
Hotel-transaction activity has surged this year, with more properties changing hands between April and September than in all of 2020. While ample capital was set aside at the onset of the health crisis, anticipating widespread discounting, actual distress has been comparatively limited. Competition for listings has instead lifted sale prices for assets. The average sale price for the 12-month period ending in the third quarter was $94,000 per room, more than 3 percent above the mean measure for 2020. The average cap rate over the past four-quarter span was 8.6 percent, a compression relative to the 9.0 percent yield recorded in 2020.
Buyers are gravitating to markets where hotels outperformed this year or are well positioned for next year. This includes assets in California
