HVS Survey: 2001 Hotel Sales, Prices Fall Considerably Short Of 2000 Marks

MINEOLA, NY— When the books are closed on the current year, the industry can expect 2001 to end up looking far more like 1999 than 2000 in terms of overall hotel sales activity as well as price-per-room paid for those properties. Indeed, in line with findings, figures, and forecasts, offered by HVS International here, there would seem to be little doubt that 2000 was an unusually positive blip on the overall lodging-sector radar screen in virtually every respect. As pointed out by Stephen Rushmore, president/founder of the hotel consulting/appraisal organization within its newly released 2000 Hotel Transactions Survey, “in 2000, the overall number of major transactions [those over $10 million per hotel]increased 24% from 1999.” However, in weighing figures solely tied to the respective first halves of the past three years, Rushmore maintained the ultimate level of hotel-sales activity for the current year will prove to be “very comparable to 1998 – 1999 totals.” Specifically, over the course of the first six months of 2001, property sales tracked by HVS’ Lodging DataBank amounted to 67 transactions. Corresponding figures for 1999 and 2000 came to 62 and 79, respectively. On the other hand, Rushmore noted that— within the confines of his firm’s in-depth analysis of the major hotel sales of calendar year 2000— “the average room price dropped by 18%.” As a matter of HVS record, (first-half) price-per-room levels equated to $151,704 in 1999 and $112,690 in 2000. As for 2001, once again something of a return to a “norm” was evidenced, with pricing checking in at $159,035 per room. Turning his focus to the trailing six months of this current year, Rushmore said he didn’t have to wait for all the figures to be verified to know that “September and October saw a serious and significant drop in the overall number of hotel sales.” Moreover, even in those deals that have been completed, he contended “there has been something in the range of a 10% – 20% decline in transaction prices since the terrorist incidents of Sept. 11.” Rushmore nonetheless tempered this assessment with an observation that the hotel sales scene seems to be brightening a bit of late. “As an industry, we’ve just about gotten over that part of the business-activity downturn specifically caused by September’s terrorist tragedies. If we’re not completely over it by the end of December,” he said, “then I feel certain we’ll be over it by the first quarter of 2002…at the latest.” However, the same scenario apparently doesn’t hold true for the economic component of the industry’s decline. As Rushmore theorized, “the economy-related part of the rebound is still anywhere from a year to three years away.”