HotelsMag July-August 2021 | Page 52

INVESTMENT
Sunstone Hotel Investors purchased the newly constructed 130-room Montage Healdsburg in California ’ s Sonoma County for US $ 265 million or US $ 2.038 million per key .
U . S . hotel sale ever for greater than US $ 1 million dollars per room .
• The 2006 sale of the W Hotel Union Square for US $ 1.056 per room was the first U . S . hotel sale ever , for continued use as a transient lodging facility .
• The single largest hotel sale ever in the U . S . was the 2014 US $ 1.95 billion acquisition by China ’ s Anbang Insurance Group of the Waldorf Astoria New York in New York .
• During 2015 , six U . S . hotels sold for greater than US $ 1 million dollars per room , followed by 2017 when five trades greater than US $ 1 million dollars per room occurred , and 2019 when four hotels sold for greater than US $ 1 million dollars per room .
• Six states , namely California , Colorado , Florida , Hawaii , Massachusetts and New York are where all U . S . hotel sales greater than US $ 1 million per room have occurred .
The soon-to-be-opened 85-room Four Seasons Resort Napa Valley in Calistoga , California , is rumored to be a target acquisition for a handful of investors , with competing bids upwards of US $ 170 million or US $ 2 million per key . In February , real estate fund manager Alcion Ventures reportedly was selling the 85-room hotel with broker and investment bank Eastdil Secured marketing the property .
Twenty years ago , the notion of a U . S . hotel selling for more than US $ 1 million dollars per key seemed inconceivable . However , during the 21st century , as many domestic and international institutional investors perceive the business of investing in luxury U . S . hotels to be exceedingly attractive , the price threshold of US $ 1 million per room has been broken on dozens of occasions . Furthermore , during the past five years and irrespective of the recent pandemic , hotel trades of more than US $ 2 million per room are a developing trend in the sector .
Continuously rising costs of construction material and labor costs are a significant factor placing upward pressure on the value of existing luxury U . S . hotels . Although distinctive hotels in the U . S . have and continue to become pricier on a per unit basis , values tend to be less than iconic hotels in Europe and Asia . While investors have become comfortable with million dollar-plus per room valuation of select U . S . lodging facilities , it is important to recognize that hotel pricing is not determined on a unit basis , but rather predicated upon perceived durability of cash flow and resulting yield on equity .
50 hotelsmag . com July / August 2021