We've heard this story before, and I've probably written it, but it really does feel like the hotel transaction market is back. Not only are trophy assets trading, but at least anecdotally, smaller properties and even distressed hotels in markets outside the top 10 and even 25 are being bought and sold.
Just yesterday, the Cleveland Plain Dealer reported Sage Hospitality and Optima Ventures had agreed to buy the aging 472-room Crowne Plaza in Cleveland. It's not the kind of deal that will send shock waves across the industry, but if deals are happening in Cleveland, that has to be a good sign for the rest of the country.
The newspaper indicates the hotel is running at 20% occupancy, and from personal experience, I can attest the rooms are in desperate need of renovation. The buyers are reportedly planning a major renovation and could rebrand the hotel a Westin. The deal will be for well below the recent county auditor's valuation of $19 million and is expected to close in June, according to the story.
Jones Lang LaSalle Hotels recently confirmed hotel transaction volume totaled $11.9 billion last year, and the hotel investment services forecasts at least $13 billion this year. Lawyer and industry veteran Jim Butler recently told me he believes the total could reach $24 billion, and based on the deals in Cleveland and Ashford Hospitality Trust's recent $1.28 billion acquisition of Highland Hospitality's 28-hotel portfolio, I think his number sounds about right.
Either way, it appears we're a long way from the dismal $2.1 billon transacted in all of 2009.