This infographic includes highlights from STR’s 2016 Transactions Almanac, which examines the volume of hotel deals and breaks them down by type of buyer, chain scale and market.
BROOMFIELD, Colorado—STR tracked 356 individual hotel transactions and 16 portfolio sales in 2016 to produce the Hotel Transaction Almanac, a comprehensive annual report detailing hotel asset trades over the past year in the U.S. (STR is parent company of Hotel News Now.)
The Transaction Almanac features a list of non-confidential hotel transactions as well as aggregate breakdowns by region, class, chain scale, location type and other property classifications for numerous key metrics. The report also discusses historical trends in data points such as deal volume, pricing, cap rates and interest rates, and includes an examination of acquisition activity by real estate investment trusts in 2016 and over the past seven years. The data used in the report is sourced from STR’s in-house transaction database and from data partner Hotel Brokers International.
Here are some highlights of the report.
In 2016, hotel transaction volume fell 41% from 2015, with only 356 property transactions recorded by STR. After three consecutive years of sales growth, 2016 was expected to continue this trend. However, actual sales fell far short of expectations at only $15.9 billion, its lowest level since 2012.
Expectations for 2017 are for somewhat of a rebound in transaction activity. In fact, through July 2017, STR has tracked more than 230 hotel sales, indicating a 13% increase year-to-date compared to same period in 2016.
Acquisitions by buyer type
In 2016, hotel companies accounted for the greatest percentage of hotel acquisitions with 33% of all deals. Real estate investment trusts accounted for 15% of 2016 transactions. This represents a significant decrease in REIT activity, down from 34% of all acquisitions in 2015 and 25% in 2014.
Conversely, foreign investment accounted for 12% of acquisitions in 2016, an increase from only 2% in 2015. The 30% of transactions classified as “other” include high-net-worth individuals, real estate firms, health care firms and a golf company, among others.
Acquisition by chain scales
When the transactions are broken down into chain scale, independent hotels account for a quarter of all 2016 sales. Independents achieved the second highest average price per room at $287,699, which is second only to luxury properties.
Upper-midscale brands, upscale brands and upper-upscale brands each represented around 20% of transactions. This follows a similar trend to recent years, with upscale properties representing the greatest percentage of branded hotel transactions since 2011.
Major market sales
New York City topped the list of major market sales by total number of sales and number of rooms, with 26 hotel transactions in 2016 representing 5,782 rooms. New York City also achieved the second-highest average price per room at $502,000 per room.
The market with the highest average price per room was Miami/Hialeah, Florida ($519,000), which did not make the list of the top 5 for either number of sales or rooms. Washington DC-MD-VA and Minneapolis/St Paul, MN-WI also topped the list in both number of transactions and number of rooms. Orlando transactions totaled 2,537 rooms, the third-highest in U.S. major markets in 2016, but at the second-lowest average price per room for the top 25 markets.
This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.