INVESTMENT
TRANSACTIONS :
Which US markets are experiencing the most activity ?
FLORIDA STANDS OUT AND THE BIGGEST DEALS EMANATED IN STRONG LEISURE MARKETS AND WERE ACQUIRED BY REITS OR INSTITUTIONAL INVESTORS .
Contributed by ERIC GUERRERO , HVS BROKERAGE & ADVISORY , HOUSTON
The U . S . hotel transaction market has come back at a brisk pace . The equity raised over the past 16 months is being deployed competitively , lenders are financing again , and hotel performance experienced a strong recovery through the summer months . There are still COVID-19-related headwinds that the transaction market must battle , but the sentiment is good , and we are optimistic that this trend will continue moving forward . Deal volume is not at a point where it exceeds pre-COVID numbers , but if this rapid pace continues , we could see a full recovery in transaction volume by year-end 2022 .
In this article , we review some of the key trades so far this year and , specifically , where the deals are happening geographically . Looking at the transaction data , there were US $ 25.5 billion in hotel transactions year-to-date through August 2021 , reflecting a 261 % increase to last year and paralleling the lodging industry ’ s performance recovery . Two important aspects that have contributed to this trend are that ( 1 ) a buyer can have an immediate going-in yield given that the asset is producing a positive cash flow , and ( 2 ) leisure markets are projected to continue to outperform corporate-driven markets , supporting a credible pro forma .
Let ’ s look at the YTD August 2021 hotel performance for the top 25 markets . As an aggregate , the U . S . market registered an average occupancy of 57.1 %, ADR of US $ 120.17 , and RevPAR of US $ 68.56 . This represents a 28 % increase in occupancy and 44 % increase in RevPAR , compared to the same period last year . The top five markets for YTD occupancy were Tampa , Florida ( 70 %); Miami , Florida
( 67.6 %); Norfolk / Virginia Beach , Virginia ( 63.7 %); Los Angeles , California ( 61.9 %); and Phoenix , Arizona ( 61 %). These five markets are all major leisure destinations within the United States . With there still being international travel restrictions in many countries , domestic leisure travel is expected to continue to remain strong , and these markets should continue to outperform the rest of the nation .
When surveying the top five priceper-key trades this year , all of them were located in strong leisure markets and were acquired by REIT or institutional investors . These sales represent the highest per-key pricing that we have seen since the start of the pandemic and illustrate the long-term belief in markets like this .
Looking at the most active markets in the country thus far this year , Florida
70 hotelsmag . com November / December 2021