New York City Hotel Transaction Volume Hits Record High

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(Photo: Stock.xchng)
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BUSINESS

  • 18 hotel transactions worth $3.5 billion traded in 2011 for 150% increase over 2010 
  • Manhattan most liquid city for hotel transactions globally in 2011
  • REITs own approximately 20% of room stock in New York
  • NYC expected to continue 2012 as most active hotel transaction market in US

Driven by Real Estate Investment Trusts (REITS), the volume of hotel transactions in New York City reached an all-time record high last year, according to preliminary results from Jones Lang LaSalle Hotels in its report called Hotel Intelligence New York.

Eighteen transactions making up nearly $3.5 billion in assets were traded in 2011, which represented a 150% increase over 2010 volume. About 50% of the city’s acquisition volume was driven by REITS last year, says Jones Lang.

“New York transaction activity in 2011 was driven by the perfect combination of strong operating fundamentals, quality product being brought to market and unprecedented REIT appetite,” said Arthur Adler, Managing Director and Americas CEO of Jones Lang LaSalle Hotels.

Adler adds: "During 2012, REITs have been less acquisitive since share prices declined in mid-2011, but are continuing to look for opportunities to upgrade their portfolios. In 2011, Manhattan was the most liquid city for hotel transactions across the globe, and grabbed the attention of investors due to its strong track record of resilience."

San Diego, Paris, Singapore and London topped off the leading five markets for hotel transaction volume in 2011, each logging over $1 billion in transactions.

The profile of hotel ownership in New York continues to evolve through economic cycles. “REITs now own approximately 20% of the room stock in New York and as such are among the top three hotel owners in the City, along with owner/operators and private equity funds,” says Amelia Lim, Executive Vice President for Jones Lang LaSalle Hotels and leader of the firm’s northeastern US advisory practice.

Hotel room revenue per available room (RevPAR) in New York saw yearly growth of nearly 7.5% as of November 2011, with average daily room rates on the rise.

Pace of US Hotel Real Estate Investment Hits 4-Year High

"The pace of hotel real estate investment in the Americas reached a four-year high in 2011, as transaction volume swelled to $15.2 billion, a 24% increase from 2010 volume", according to Co Star Group News.

Worldwide, “lodging demand trends continue on a solid recovery trajectory,” says Co Star Group News, “while the ongoing hotel recovery is expected to be uneven." It is a recovery nonetheless, observers say, and one clearly reflected in recent investment activity.

Hotel transaction experts predict 2012 will bring much the same as New York is expected to remain the most active hotel transaction market in the United States. So far, approximately a dozen single-asset hotel transactions are expected to close in New York in 2012.

Key Statistics - Hotel Transactions in New York (source: Jones Lang LaSalle Hotels Hotel Intelligence New York report)

  • New York City’s hotel transaction volume last year represented more than 20% of total US hotel transaction activity.
  • Hotel deal volume in NYC is expected to range from $2.2 billion to $2.6 billion this year, which represents about 15% of America’s total transaction volume. 
  • Room supply should increase by over 3%, with 17 new hotels totaling 2,700 new rooms expected in 2012.

By David Wilkening for
David Wilkening is a former newspaperman who worked in Chicago, Detroit and Orlando. He now specializes in travel and real-estate business writing.

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