The U.S. Hotel performance had a very strong start to Q2 2024 because of various events like RSA conference, NFL Draft, WrestleMania 40, NCAA Men’s Final Four, NPE2024 in various major hospitality markets across the nation. However, the performance declined to sub-65% occupancy levels on account of the Memorial Day weekend. However, the decline was short-lived as the U.S. hotel performance increased once again in June on account of various corporate events as well as the demand from leisure travel.   (Source: STR)

Analytical Summary

Major Q2 2024 transactions (By Sale Price)

1. Hotel Name: Arizona Biltmore, LXR Hotels & Resorts Location: Phoenix, AZ No. of rooms: 703 Sale Price: $705,000,000 Price per unit: $1,002,845 per unit Seller: BRE Hotels & Resorts LLC Buyer: Eagle Realty Group
2. Hotel Name: Embassy Suites by Hilton Nashville Downtown Location: Nashville, TN No. of rooms: 506 Sale Price: $347,200,000 Price per unit: $686,166 per unit Seller: Crescent Real Estate LLC Buyer: Host Hotels & Resorts, Inc.
3. Hotel Name: Hyatt Regency San Antonio Riverwalk Location: San Antonio, TX No. of rooms: 630 Sale Price: $230,000,000 Price per unit: $365,079 per unit Seller: Hyatt Hotels Corporation Buyer: Sunstone Hotel Partnership
4. Hotel Name: 1 Hotel Nashville Location: Nashville, TN No. of rooms: 215 Sale Price: $182,800,000 Price per unit: $850,233 per unit Seller: Crescent Real Estate LLC Buyer: Host Hotels & Resorts, Inc.

Source: CoStar

Q2 2024 Cap Rates

Average cap rates for U.S. hotels decreased by 10 basis points in Q2 2024 as compared to Q1 2024. The following table illustrates minimum, maximum and average cap rates for U.S. hotels in Q2 2024 & Q1 2024.

Source: RealtyRates.com

Outlook

A forecast from Costar suggests that office capitalization rates will rise. Although hotel capitalization rates are expected to increase, they are also anticipated to have a smaller delta over office capitalization rates. Outside of transactions, the hotel commercial mortgage-backed securities (CMBS) market is wide open, and MCR and Blackstone, among others, were able to finance and refinance large portfolios at relatively attractive terms. Industry participants expect more to be refinanced as interest rates decrease.