$12.5 billion in U.S. Hotel Transactions in 2012; Down from 2011

According to initial data from the Hotel Transaction Almanac, a report from STR Analytics, and the Hotel Investment Barometer set to be released in February, more than US$12.5 billion in hotel transactions occurred in the U.S. in 2012.

While hotel industry fundamentals continued to improve in 2012, investment activity dropped compared with the US$19.4 billion in asset trades that occurred in 2011.

"Hotel investment activity clearly slowed in 2012, but pricing remained strong," said Steve Hennis, director at STR Analytics. "We expect transaction volume to rise again in 2013 as RevPAR recovery continues to drive higher profits, supply growth remains negligible and financing becomes more accessible."

Key findings from the 2013 Hotel Transaction Almanac include:

- The average price per key in 2012 remained relatively stable to that of 2011 at close to US$190,000.

- Only 12% of transactions involved distressed assets, a sharp decline from 2012 when almost one out of three asset trades included struggling properties.

- Only 16% of hotel acquisitions were by real estate investment trusts, a noticeable decline from 2012 when 35% of purchases were by REITs.

- Surprisingly, the average cap rate declined to 9.1% in 2012 from 10.4% in 2011.

The Hotel Transaction Almanac is an overview of historical trends in U.S. deal volume and pricing. It includes aggregate breakdowns by region, property class and location type for numerous key metrics. The Hotel Transaction Almanac combines STR Analytics' in-house transaction database with that of data partner Hotel Brokers International (HBI) to create a comprehensive hotel transactions report. The report also includes valuation parameters including price per key, room revenue multiplier, additional capital invested, cap rate and financial terms including interest rates and loan-to-value ratios. The Hotel Transaction Almanac is produced on an annual basis.