Mid-market Hotels Continue to be Favored by Buyers
Hotel Brokers International, the nation's largest brokerage organization with more than 30 offices coast to coast, today announced record sales for the nine months ended September 30, 2006. The organization sold 97 hotels during the 2006 first three quarters, up from 87 in the same period a year ago, averaging approximately 2½ transactions per week. Total sales volume was $388.1 million.
'We continue to see extraordinarily high interest from buyers in all segments,' said Teague Hunter, CHB, HBI president and executive vice president of Atlanta-based Hunter Realty Associates. 'Upscale and higher segments continue to generate the lowest cap rates, but mid-market properties continue to be the most sought after. Cap rates moved up slightly to 8.7 percent for mid-market hotels without food and beverage. Barring unforeseen events, there are probably several years of strong pricing still ahead. However, from a timing standpoint, those thinking of selling in the near future should begin the listing and sales process now or risk lower pricing down the road.'
Property transaction activity was particularly strong in California and other West Coast states during the quarter. 'The West Coast rebounded later in this cycle and was slower to respond to rising prices,' said Chuck Nester, CHB, CHA, president of Brown Hotel Group, Inc. Westlake Village, Calif. 'Buyers have quickly made up the lost ground, and hotels now are trading at near record cap rates.
'We also have noticed a substantial number of 'fair-weather' hotel brokers, who often call themselves 'investment bankers,' seeking to cash in on the active market,' he added. 'Most have little or no experience in the intricacies of this real estate class, and often don't market the properties effectively. This is typical for this phase of the cycle and most will move on to the next 'hot' market when the hotel industry begins to cool later in the cycle.'
Brokers who have seen significantly higher dollar volume increases in sales include:
• Brown Hotel Group-- Chuck Nester, CHB; Chuck LaPorte
• Donohoe Real Estate Service, Inc.-Bill Moyer, Charlotte Seale
• Huff, Niehaus & Associates, Inc. - Brandt Niehaus, CHB
Hotel Brokers International, with more than 100 hotel brokerage specialists, is the world's leading hotel sales organization. The organization annually accounts for the greatest market share of mid-market transactions in the United States. HBI also hosts the Hotel Investor's Marketplace, sponsors the Certified Hotel Broker program and publishes TransActions Recap, the leading source of hotel real estate sales data.
HBI currently has more than 150 properties listed for sale in its proprietary database and access to more than 10,000 hotel investors and owners. In addition to broker services, HBI offers affiliate membership to professionals in allied fields, including franchising, lending, appraisals and investment services. For more information about HBI's hotel listings or to become a broker or affiliate member, HBI may be reached at (816) 505-4315 or via the Internet at www.hbihotels.com.
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