U.S. Hotel Performance Q3 2024: Key Metrics, Transactions, and Market Trends
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- On January 3, 2025
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2. Hotel Name: The Ritz-Carlton O'ahu, Turtle Bay Location: Kahuku, HI No. of rooms: 463 Sale Price: $680,000,000 Price per unit: $1,468,683 per unit Seller: Blackstone Inc. Buyer: Host Hotels & Resorts, Inc. 
3. Hotel Name: Eau Palm Beach Resort & Spa Location: Lantana, FL No. of rooms: 309 Sale Price: $317,000,000 Price per unit: $1,025,889 per unit Seller: Blue Coast Capital, Inc. Buyer: Lawrence Investments, LLC 4. Hotel Name: Thompson Central Park, New York Location: New York, NY No. of rooms: 587 Sale Price: $308,000,000 Price per unit: $524,702 per unit Seller: Elliott Management Corp Buyer: Gencom (Source: CoStar)
[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_row_inner][vc_column_inner width='1/2'][vc_column_text]Q3 2024 Cap Rates
Average cap rates for U.S. hotels increased by 12 basis points in Q3 2024 as compared to Q2 2024. The following table illustrates minimum, maximum and average cap rates for U.S. hotels in Q3 2024 & Q2 2024. (Source: RealtyRates.com)[/vc_column_text][/vc_column_inner][vc_column_inner width='1/2'][media animation='none' image='10464'][/vc_column_inner][/vc_row_inner][vc_row_inner][vc_column_inner][vc_column_text]Cap Rate Q3 2024 Q2 2024 Difference (bps) Minimum 6.31% 6.18% 13 Maximum 16.34% 16.30% 4 Average 10.87% 10.75% 12 Source: RealtyRates.com
[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_row_inner][vc_column_inner][vc_column_text]Outlook
Hotel capitalization rate forecasts have been gradually increasing but are expected to peak in mid-to-late 2025. Historically, hotel capitalization rates were 100 to 150 basis points higher than office capitalization rates. This margin continued to shrink recently, and the forecast suggests that office capitalization rates will rise and peak in 25Q2. On the limited-service side, we hear from brokers that a change in ownership will likely trigger a renovation for those, i.e., most hotels that are well behind in their PIPs, roughly doubling the price per room of the expected sales price. This will make some deals infeasible.[/vc_column_text][vc_empty_space][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row][vc_column width='1/3'][block_title title='By'][/block_title][staff staff='3037' style='style_2'][/vc_column][vc_column width='1/3'][vc_empty_space][/vc_column][vc_column width='1/3'][vc_column_text]Share via
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