Inflated prices paid for U.S. hotels begin to outpace occupancy

TRD New York /
Jun.June 24, 2011 08:41 AM

High prices paid by real estate investment trusts for U.S. hotels may be beginning to outpace gains in room rates and stays, according to Bloomberg News. Average prices paid for lodging properties rocketed to $185,000 per room in the first quarter of 2011, having previously peaked at $153,000 in 2006, before plunging 37 percent only two years ago.

While occupancy rates are rising (up to 63 percent in the first quarter from 60 percent a year earlier), the gains aren’t happening quickly enough to keep up with inflated prices being paid for some full-service properties, said Rick Kleeman, managing partner at Wheelock Street Capital, a Connecticut-based REIT. “Asset prices on average have led fundamentals,” said Kleeman,. “Obviously you have fundamentals improving, but clearly the economy is not picking up as fast as we had hoped.

In cities such as New York, “hotels are routinely trading at $200,000 per key above what it would cost to replace them,” said Mark Elliott, a partner at Atlanta-based brokerage Hodges Ward Elliott.

Recent hotel transactions in New York include Pebblebrook’s purchase of six Denihan Hospitality Group hotels in Midtown and Aby Rosen’s purchase of the Paramount Hotel. [Bloomberg News]


Related Articles

arrow_forward_ios
Aby Rosen and Lever House at 390 Park Avenue (Credit: Getty Images and Google Maps)

Aby Rosen says Tod Waterman stabbed him in back on Lever House deal

From left: Barbara Slifka, 477 Madison Avenue and RFR Holding's Aby Rosen (Credit: Google Maps and Getty Images)

Aby Rosen picks up Madison Avenue office property once center of family feud

The Four Seasons at 42 East 49th Street and Four Seasons managing partner Alex von Bidder (Credit: Four Seasons Restaurant)

Curtain closes on the Four Seasons at
280 Park

The Chrysler Building and Aby Rosen of RFR Holdings

Abu Dhabi’s Chrysler crash

From left: 100 East 53rd Street, Alain Verzeroli, and Aby Rosen (Credit: Michelin Guide and Getty Images)

This restaurant will anchor Aby Rosen’s 100 East 53rd Street condo tower

Ana Sorokin (Credit: Getty Images)

Con artist who sought nightclub deal with Aby Rosen gets 4 to 12 years in prison

Aby Rosen and 345 Park Avenue South (Credit: Getty Images)

Aby Rosen selling 345 PAS to medical fund manager Deerfield

The Chrysler Building and Aby Rosen of RFR Holdings

Abu Dhabi’s Chrysler crash

arrow_forward_ios
Loading...