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Report on Major Hotel Transactions
by Suzanne Mellen of HVS
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By Jim Butler, Hotel Lawyer | Author of www.HotelLawBlog.com
May 13, 2008

We always get the latest updates on the State of the Hotel Industry at Meet the Money® -- JMBM's annual hotel conference which just concluded its 18th annual edition on May 8, 2008. And one of my favorite updates is the one that Suzanne Mellen of HVS gives us on major hotel transactions.

Here is the very latest . . .

Major Hotel Transactions.

For many years, our friends at HVS have been collecting data on what they call "Major Hotel Transactions." These are single property transactions -- not portfolios -- where the transaction price exceeds $10 million.

This first slide shows the number of major hotel transactions per year from 1990 through the present.

Note the dramatic fall off in volume of these transactions in 2008 -- only 20 transactions -- for January through April of 2008, compared to 106 for the same period in 2007.

And this next slide shows the average price per room by year. Look at the change represented by the data for January through April of 2008 compared to January through April of 2007.

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IMPORTANT CAVEAT: Suzanne Mellen noted that the recent sharp decrease in average price per room did NOT mean that price per room is necessarily coming down. She believes that this fact, at least presently, is largely attributable to the fact that higher priced properties are not involved in buy-sell transactions (see 2 slides below). So this slide is really showing us the average price per room of more midscale or economy-oriented properties that have transacted in 2008, and this skews the results.

. . . and more detail of the transactions by month . . .


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. . . and by transaction sale price. Look at the complete absence of any hotel transactions at a price of $100 million or more in 2008 -- a new milestone for the decade!
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Here is the same data presented in a different graphic format.



Jim Butler is a Founding Partner of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm's Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at jbutler@jmbm.com or 310.201.3526. For his views on current industry issues, visit www.HotelLawBlog.com.

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Contact:

Jim Butler
Chairman, Global Hospitality Group
Jeffer, Mangels, Butler & Marmaro LLP
1900 Avenue of the Stars, 7th Floor
Los Angeles, CA 90067-4308
(310) 201-3526 direct
jbutler@jmbm.com
www.HotelLawBlog.com 
 

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Also See: How Good Is the Hotel Business and How Good Can it Get? / Jim Butler / March 2007
International Hotel Investments: Hotel Developers Should Keep their Eyes Wide Open; The Plays to Make Successful International Hotel Investments / Jim Butler / January 2007
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