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broader transaction activity. Washington, D. C., leads with remarkable consistency( 71 transactions across 11 years), followed by New York( 57 transactions) and Chicago( 52 transactions). This density of transactions creates robust valuation benchmarks for these markets.
PRICING MILESTONES AND EVOLUTION A watershed moment for luxury hotel pricing occurred in 2015 when the 250-room Montage Laguna Beach traded for $ 360 million, which, at $ 1.4 million per room, became the first U. S. transaction exceeding $ 1 million per key, setting a new benchmark for ultraluxury assets.
This threshold remained exclusive until broader adoption post-pandemic, with markets like the Florida Keys, New York and select California markets achieving $ 1-millionplus-per-key pricing levels between 2021 and 2024.
Price-per-key data reveals interesting cyclical patterns. Luxury assets in key urban markets experienced compressed pricing following the 2020 pandemic, but showed remarkable recovery by 2022-2023, particularly in resort destinations, where pricing surpassed prepandemic levels by 20 % to 25 %. This recovery trajectory has provided valuable pricing recalibration for valuation professionals.
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ON VOLUME The latest JLL Hotel Investment Trends report indicates Q1 2025 transaction volume reached $ 4.6 billion, up 23.1 % from Q1 2024, though still 52 % below the cyclical peak of 2022. This pattern mirrors broader economic cycles affecting commercial real estate, with investors adjusting to higher interest rates, but continuing to view hotels as an inflation hedge.
A notable trend has been the shift in the distribution of deal size. Mid-sized deals($ 50 million- $ 199 million) now represent 40 % of transaction volume, up 20 percentage points from Q1 2024. This reflects a strategic repositioning by investors toward high-quality assets in primary urban markets that benefited from rebounding corporate and group demand.
Buyer profiles have diversified significantly since 2019. Though private equity dominated early post-pandemic transactions( 66 % in Q1 2021), recent quarters show more balanced participation across private equity( 33 %), owner / operators( 22 %), foreign capital( 12 %) and high-net-worth individuals / family offices( 6 %). This diversification enhances market liquidity and provides multiple exit strategies for owners.
URBAN RENAISSANCE AND SUPPLY CONSTRAINTS Urban luxury and upperupscale
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assets have staged a remarkable comeback, with RevPAR recovery reaching 109 % of 2019 levels by Q1 2025, closing the gap with resort properties( 123 %). This urban renaissance is fueled by robust corporate group demand and presents a compelling acquisitions opportunity, as urban full-service hotels that traded during this timeframe on average sold for around onethird below replacement cost.
Limited new supply will continue supporting performance and valuations across both segments. Hotel supply is forecast to grow at just 0.7 % annually through 2028, substantially below the long-term average of 1.7 %. This scarcity premium particularly benefits existing luxury and upper-upscale assets in supplyconstrained markets.
UP AHEAD: INVESTMENT CATALYSTS Several factors are aligning to potentially accelerate transaction activity through 2026. Hotel loan maturities totaling $ 145 billion over 2025- 2026 will drive recapitalization and sales. Meanwhile, hotelspecific fundraising reached its highest level since 2007 in 2024, indicating substantial dry powder targeting the sector.
Foreign capital, particularly from the Middle East, Europe and select Asian countries, continues targeting irreplaceable assets in gateway markets, such as New York,
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Boston, Washington, D. C., Miami and Los Angeles. These investors typically focus on trophy luxury assets with longterm appreciation potential rather than immediate yield.
VALUATION IMPLICATIONS For valuation professionals, this robust transaction history provides critical comparative data that complements income-based approaches. The pricing patterns across market segments, locations and economic cycles allow for sophisticated adjustments when determining market value. Combined with operating performance metrics and replacement cost analysis, these transaction benchmarks create a robust triangulation methodology for precise hotel valuation in today’ s dynamic market.
As we navigate through 2025, the luxury and upperupscale segments demonstrate strong fundamentals backed by limited supply growth and evolving traveler preferences, positioning them favorably within the broader commercial real estate landscape.
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