First-quarter hotel sales hit 6-year high

More than $12.5B in hospitality deals in first three months of 2022

National /
Apr.April 19, 2022 03:30 PM
(iStock)

(iStock)

Hotel sales are looking up across the country, despite evidence that some hotels are still struggling to recapture lost value.

More than $12.5 billion in hotel deals were sealed in the first quarter of the year, according to CoStar data reported by the Wall Street Journal. The sales volume is the highest for the quarter since 2016.

Investors snapping up hotel properties see a bright future, in contrast to its pandemic-plagued recent past and present. Hotels are expected to recover faster than offices or malls.

As a result, the value of hotel properties is soaring from its recent trough. Real Capital Analytics said hotel values climbed 18 percent from March of last year. Prices on hotels are outpacing profits, according to the Journal, reflecting an optimistic view of the sector’s future.

Delinquent hotel mortgages are also on the way down. The share of securitized mortgages delinquent last month was about 6.8 percent, according to data from Trepp. It’s the lowest delinquency rate for the sector since April 2020, the first full month of the pandemic.

An increase in savings and wages is being cited as a factor leading Americans back to hotels. But that could go in the other direction as mortgage rates and inflation rises, giving Americans less spare cash to spend on vacations and hotels.

Additionally, hotels may be selling across the board, but not at the same pricing level in all markets. In the first quarter, one of New York City’s largest hotels traded hands at a nearly $400 million loss from its last sale.

MCR agreed to acquire the Sheraton New York Times Square from Host Hotels & Resorts for $356 million. Prior to that, the 1,780-key otel last sold in 2006 for $738 million, according to property records.

[WSJ] — Holden Walter-Warner





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