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 Hotel Transaction Activity Loses Momentum during First Half of 2008; 
Debt Markets and Economic Outlook Weigh on Pricing
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DENVER, Colorado � August 11, 2008 � Close to $3 billion in upscale and luxury lodging facilities traded during the first half of 2008, according to Stephen Hennis, Managing Director of Hospitium. This is well below the $11.5 billion in individual property deals that occurred in the first half of 2007. �With a difficult lending environment and more conservative underwriting on the part of investors, deal activity in 2008 has tapered significantly,� Hennis states. �However, we still expect to see between $5 billion and $6 billion in assets change hands this year.�

The current acquisitions pace is less than one-fourth that of last year. At this point in 2007, over 190 properties traded, according to Hospitium. In contrast, only 45 upscale and luxury lodging facilities have sold thus far in 2008. Moreover, market conditions continue to rein in per-room pricing, declining from $202,000 in 2007 to $168,000 through the first half of this year.

�The debt markets, which helped to drive values in recent years, are not as competitive today,� notes Hennis. �While debt is still available, the residential mortgage crisis and the struggling economy have caused some lenders to pull away from the market. Consequently, the terms are less attractive with lower loan-to-value ratios and higher spreads than what we observed during the peak of the cycle.�

�The equity side of the deal has also changed,� states Hennis. �With an uncertain economic outlook, coupled with higher airfares and rising gas prices weighing on the travel industry, investors are more conservative in evaluating acquisition opportunities. Double-digit RevPAR growth projections are no longer supportable, with many operators anticipating a tough 2009.�

The sale of the Hyatt Regency Century Plaza topped the list of major transactions in the first half of 2008 at a price of $366.5 million. The Renaissance M Street in Washington DC and the James Hotel Chicago were the only other individual property trades that exceeded the $100 million mark. High-end luxury assets and major destination resorts have been virtually absent from the transaction landscape in the first half of 2008.

According to Hospitium, only two acquisitions involved true luxury hotels and a mere four deals consisted of resort properties.

About Hospitium
Hospitium is a hotel consulting firm that specializes in the upscale and luxury sectors of the lodging industry. From the early stages of development or deal negotiation through asset disposition, Hospitium delivers timely and useful research, analysis, and insight that assist the various needs of owners, developers, management companies, and financial institutions. Hospitium provides a wide array of advisory services and products, including feasibility studies, due diligence, underwriting, appraisals, strategic planning, and transaction guidance.

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Contact:

Stephen R. Hennis, CHA
Managing Director
303.506.0250
[email protected]
www.hospitium.com

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Also See: Michael Rosenfeld�s Next Century Associates Acquires the 726 room Hyatt Regency Century Plaza Hotel for $366.5 million, Approximately $505,000 per room, from Sunstone Hotel Investors, Inc./ June 2008
Over $11.5 billion in Luxury Lodging Facilities Changed Hands in the First Half of 2007; Maui Prince Makena Tops the List of Transactions at a Price of $575 million / July 2007

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