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  • Writer's pictureRealFacts Editorial Team

US Hotel Transactions Poised for Surge: An Investor’s Opportunity

hotel pool

The U.S. hotel market is on the verge of a significant increase in transactions, presenting a compelling opportunity for investors. According to Zach Demuth, global head of hotels research for JLL Hotels & Hospitality, a "perfect storm" of economic factors is setting the stage for a wave of hotel sales. Speaking at the 2024 NYU International Hospitality Industry Investment Conference, Demuth highlighted that many hotel loans are maturing at a time when refinancing costs have soared, creating financial pressure for owners.

This situation is compounded by rising insurance and capital expenditure costs, pushing hotel owners to consider selling their properties. "Loans are coming due, rates are 3.3 percentage points higher. If you were to refinance, even at your current net operating income, it would be challenging to meet coverage ratios," Demuth explained. For investors, this means that many properties will be available at potentially discounted prices.

Despite these challenges, the market is not in widespread distress. Instead, well-capitalized buyers, including private equity firms and high-net-worth individuals, are showing strong interest in acquiring hotel assets, often through all-cash deals. This influx of ready buyers is expected to stabilize and possibly increase property values.

Regions likely to see the most activity include Sun Belt markets like New Orleans and Houston, and West Coast cities such as San Francisco. These areas, heavily reliant on group and business travel, have been slower to recover post-pandemic, making their hotel assets prime targets for acquisition.

The convergence of high-interest rates, operational cost pressures, and a pool of eager buyers presents a unique window of opportunity for investors in the U.S. hotel market. With property values currently 20% to 30% below pre-pandemic levels, the potential for value appreciation as the market stabilizes makes this an opportune time for strategic investments in the hotel sector.


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