After a period of caution, buyers are looking to hotels again, reports Marcus & Millichap. Despite lingering challenges facing the lodging sector, investors are showing no signs of backing off.

Hotel transaction activity has surged in 2021, with more properties changing hands between April and September of this year than in all of 2020. While ample capital was set aside at the onset of the COVID-19 pandemic, anticipating widespread discounting, actual distress has been comparatively limited. Instead, competition for listings has 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 in the four quarters through third quarter 2021 was 8.6 percent, a compression relative to the 9.0 percent yield recorded in 2020.

When it comes to the hospitality sector, there is a split between leisure travel markets and business travel ma