Dive Brief:
- Large hotel transactions are on the rise, with total single-asset hotel transaction volume for deals larger than $200 million reaching its highest level in eight years, according to a JLL report obtained by Hotel Dive.
- According to the commercial real estate company, the upward trend is being fueled by several noteworthy closings this year, including Hyatt’s recent $1.1 billion sale of the Hyatt Regency Orlando — reportedly the largest hotel sale of 2024.
- JLL forecasts that investor momentum for similar “marquee, large transactions” will continue to increase over the short-to-medium term. The company previously reported that supply growth, travel demand and changes to the lending environment will drive hotel investment this year.
Dive Insight:
As of this month, there has been a 59% year-over-year increase in transaction volume for single-asset deals larger than $200 million, with a total of $4 billion recorded, JLL reported. Transaction volume is also up 15% from 2019 levels.
Heightened investor appetite for “high-quality, large transactions, particularly for luxury hotels situated in high growth markets and urban centers” is driving that volume, according to JLL.
Investors remain interested in urban markets, specifically, because they are experiencing robust RevPAR from the resurgence of group, corporate and international travel, according to JLL’s H1 2024 U.S. Hotel Investment Trends report.
In recent years, the cost to develop an urban full-service hotel has soared due to supply chain disruptions and rising labor and materials costs, making it more cost-effective to transact to grow portfolio scale, JLL detailed in the H1 report.
Several notable hotel sales this year include the Turtle Bay Resort on Oahu for $725 million, the Arizona Biltmore hotel for $705 million, 1 Hotel Central Park New York for $265 million and the Hyatt Regency San Antonio Riverwalk for $230 million.
Hotel companies like Hyatt are increasingly offloading large properties to follow a “valuable” asset-light strategy, experts told Hotel Dive earlier this month.
And an increased number of hotel owners will sell their assets, rather than refinance, to repay debt that’s coming due by the end of 2024, JLL forecasted in May.
