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HVS’ 2000 Hotel Transactions Survey: Number of Sales increase in 2000, but Price Per Room Drops Considerably |
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Stephen Rushmore, president and founder of HVS International, a global hospitality consulting and hotel appraisal firm, has recently published the 2000 Hotel Transactions Survey – an analysis of the major hotel sales in that calendar year. |
“This analysis shows us that in 2000 the overall number of major transactions (over $10 million per hotel) increased 24% from 1999, but the average room price dropped by 18%,” states Rushmore. “ A major reason for this decline in price per room was the 61% increase in the number of sales in the ‘Below $25 Million’ category. Although the actual number of sales from 1999 to 2000 increased by 61%, the aggregate in total dollars transferred was less than a 5% difference between the 2 years.” Rushmore also noted “large portfolio sales exceeded the $1 billion mark with Barcelo Group and CNL leading the market in hotel acquisitions. The largest seller in 2000 was Marriott International with more than 27 hotels transferring to new ownership.”
“The reduced mortgage cost from 1999 to 2000 helped to contribute to the increase in hotel sales,” added Antonia Viens, MAI, Director of Data Collection and Research for HVS International and co- author of The Survey. Viens further states, “while sales did increase from 1999 to 2000; the sales activity is still considerably less than the period from 1996 through 1998. Rather than buying properties simply to increase the size of their portfolios, companies are now buying for more strategic purposes. Furthermore, several of the major buyers from prior years are divesting of non-core assets that do not fit their portfolios.”
Casinos were discussed in a separate section of the Transaction Survey. This is due to the large acquisition price attributed to the gaming aspect of the hotel that would skew the purchase price and subsequently the price per room when compared to non-casino properties. Of interest in this section is the Desert Inn and Casino which sold for $270 million or $329,000 per room. Even at this substantial acquisition price the new owners are planning a complete rebuilding and upgrading of the hotel and grounds.
*The Arizona Biltmore sold for the highest price of all hotels transferred in 2000. The Four Seasons Santa Barbara sold for highest price per room. The purchaser of the Four Seasons was Ty Warner who also purchased the hotel with the highest price per room in 1999.
*In addition to purchases by Barcelo and CNL other sizeable portfolio acquisitions and ultimately the largest hotel purchasers included; Hospitality Property Trust, Sunstone Hotels, The Ramkota Company and RLJ Development. Portfolio purchases included a number of Wyndham Gardens, Courtyards, Residence Inns, SpringHill Suites, and TownPlace Suites.
*Accompanying Marriott as the largest seller in 2000 are other sellers for the year to include: The Hempstead Group, Starwood Hotels & Resorts, Wyndham International, Inc., Lodgian, Inc., Prime Hospitality. Starwood sold the Westin St. Francis for $243 million or $203,000 per room.
New to the Hotel Transaction Survey this year is a region-by-region comparison of sales from 1999 and 2000. The Mid-Central region reflected similar numbers in all categories of sales, while overall declines occurred in the Mid-Atlantic, Mid-East, New England, and Southwest regions. The almost 50% decrease in the Mid-Atlantic region is primarily attributed to the numerous hotel transfers that occurred in New York City in 1999.
Also new this year to the Hotel Transactions Survey is the half-year (January 1st through June 30th) comparisons for the years 1999, 2000 and 2001. Summaries of each year show in total dollar amount the numbers to be very similar between 1999 and 2001. Numbers of sales for these two years were 62 and 67 respectively. Sales for the first six months of 2000 were more than 27% greater for the same time period in 1999. In 1999 the average room price for the first six months of the years was $152,000 with 2000 declining to $113,000. Sales for the first six months of 2001 increased to $159,000 per room.
Information within the 2000 Hotel Transactions Survey was obtained from the Lodging DataBank. The Lodging DataBank was developed by HVS International to house hotel information, sales transactions, market studies and company research pertaining to the hospitality industry. HVS is merely a conduit for the data within the 2000 Hotel Transactions Survey. HVS does not assume responsibility or liability for the data accuracy, usability, confidentiality, or other matters related to the survey.
Since 1980, HVS International, the leading global hospitality consulting organization, has provided financial and valuation consulting services for more than 10,000 hotels in all 50 states and more than 60 foreign countries. Our professional staff of more than 150 industry specialists offers a wide range of services including market feasibility studies, valuations, strategic analyses, development planning, and litigation support. Through our divisions and alliances, HVS supplies additional hotel consulting expertise. HVS databases contain comprehensive information on more than 20,000 hotel transactions, operating agreements, financial statements, and compensation information.
To order copies of the 2000 Hotel Transactions Survey, contact Joan Raffetto at (516) 248-8828 ext. 231, or by e-mail at jraffetto@hvsinternational.com.
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Contact Information:
372 Willis Avenue
Mineola, New York 11501
516-248-8828
516-742-3059 FAX
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Since 1980, HVS International, the leading global hospitality consulting organization, has provided financial and valuation consulting services for more than 10,000 hotels in all 50 states and more than 60 foreign countries. |
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