Through the first five months of the year, the pace of hotel transactions has been steady and strong, but not spectacular. That could soon be about to change, according to many lodging leaders at the NYU International Hospitality Industry Investment Conference.

“There was an expectation that assets would be dumped on the market,” said Art Adler, Jones Lang LaSalle Hotels’ managing director and CEO of the Americas, during a general session Tuesday at the Marriott Marquis Times Square. “Lenders are more disciplined now. A great deleveraging is coming in the next five years. There will be epic transaction volume … More mega deals are coming this year.”

Jones Lang LaSalle Hotels, which tracks transactions $10 million and up, reports U.S. deal volume reached $5.1 billion through May. The five-month mark is off last year’s total of $6.4 billion. The number does not include the $1.9 billion Blackstone purchase of Motel 6 that hasn’t closed yet. Nor does it count note sales, foreclosures or other loan-to-own recapitalizations that would increase the transaction volume by 50%, estimated Larry Wolfe, Eastdil Secured’s senior managing director. If it were counted, lodging’s deal volume would be at 2005 and 2006 levels, he said during the panel with Adler.

Despite an uneven economic recovery in the U.S. and continued concerns over Europe, operating performance continues to climb. Supply growth is at historic lows, while demand reaches new highs. Revenue per available room will climb 5.5% this year and another 5.4% next year, according to STR Chairman Randy Smith. And in 18 months, RevPAR will reach 2007 peak levels.

Steve Rushmore, HVS founder, followed Smith on stage Monday and called today’s lodging environment the “best hotel buying opportunity in the U.S. since 1991.” After falling 31% in 2009, hotel values have risen 17% in 2010, 20% last year and HVS projects 17% increases this year and next. For that reason, Rushmore believes single-asset transactions will be down this year while owners hold their assets to take advantage of the rise in values.

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