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Since we're always asked about the M&A market during earnings season, we've highlighted a few trends below.

MARKET TRENDS for the 3Q

  • Average Key Per Price for luxury/UUP transactions in 3Q rose to $350k, which was higher than the YTD average of $300k.  
  • Global transaction volume of $9.9BN topped last year’s level of $9.0BN.  
  • US transaction volume is closing in on $5BN, up 106% YoY.  The bulk of transactions continue to be single-asset and Luxury/UUP.
  • REITS (existing and newly formed) have dominated the M&A market so far.
  • Access to capital continues to be limited.
  • According to Fitch - CMBS hotel loans defaulted at a higher rate (20%) in August than July (18.6%)

LUXURY/UUP MARKET

  • Average Key Per Price
    • US $359,795 since 6/30/2010 (13 transactions)
    • $301,886 YTD (33 transactions)
  • International
    • $279,784 since 6/30/2010 (11 transactions)
    • $427,097 YTD (24 transactions)
  • Cap rates/Valuation
    • 5-6% range, in line with 2006 cap rates
    • 9-11x EBITDA; however, two luxury hotels recently sold at 17-18x EBITDA

Q3 Transactions (Summary)

Q3 HOTEL TRANSACTIONS UPDATE - transaction1x

Q3 HOTEL TRANSACTIONS UPDATE - transaction2x

Q3 HOTEL TRANSACTIONS UPDATE - transaction2

Q3 HOTEL TRANSACTIONS UPDATE - transaction3

Q3 HOTEL TRANSACTIONS UPDATE - transaction4