Strong Deal Activity: Quarterly Hotel Sales Volume Back to Normal After 2020

hotel sales volume

The ongoing recovery for U.S. hotel operations also lifted the sales volume for hotel assets in 2021. As lenders and investors became more comfortable with the trajectory of improving demand and revenue per available room (RevPAR), underwriting the next five to 10-year horizon became much easier. This in turn spurred strong interest from buyers who stayed on the sidelines in 2020. For 2021 overall, total sales added up to roughly $48 billion, which is the second-highest annual sales volume after $48.4 billion in 2015. Investors see compelling values in an industry that was battered by the global pandemic but is now mostly recovering. Leisure travelers have returned, and corporate demand is expected to return as well in the coming quarters, making the industry a compelling target for further capital allocation.

More than $13 billion in hotel assets were traded in the fourth quarter of 2021. Quarterly sales activity was boosted by acquisition activity on the high end of the market. Blackstone closed on its disposition of the Cosmopolitan Hotel and Casino on the Las Vegas Strip and the allocated sales price for the real estate was around $3 billion, or just over $1 million per key.

Including the Cosmopolitan, six properties sold at more than $1 million per key. Of those six, two property acquisitions stand out. The Four Seasons Napa Valley in California achieved a price of better than $2 million per key. In addition, Geolo Capital sold the Ventana Big Sur in California to Hyatt for around $3 million per key, and after a very short hold period, Hyatt sold the hotel the Host Hotels and Resorts REIT. The location of these sales indicates continued optimism about resorts in California that can attract guests from the greater San Francisco area.


Trades for luxury resorts in general show that funds are flocking to high-end properties, which weathered the pandemic relatively will. Luxury room rates in 2021 surpassed 2019 luxury room rates by more than 10 percent. The makeup of the buyer list is not that different from prior quarters, with the vast majority being classified as national buyers, followed by local buyers. Fewer than 20 entities are classified as foreign buyers.

The largest portfolio transaction in the news in 2021 was the take-private transaction of Extended Stay America by Starwood Capital and Blackstone. Hotels in the extended-stay class held on to customers throughout the early days of the pandemic and showed remarkable resilience, which made them an interesting acquisition target for private equity firms.

In 2022, we expect strong deal activity as high-end and limited-service hotels continue to report strong operating results. Upper-upscale hotels in downtown locations are still struggling and need substantive corporate transient and group demand to return to pre-pandemic performance. This in turn means that prices for upper-upscale assets could continue to be depressed as some recent deal activity seems to indicate.

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