�This analysis shows us that in 1998 more hotel companies purchased upscale and luxury full-service hotels,� states Rushmore.  �Although hotel sales activity declined slightly in 1998 from 1997, the average sale price per room increased to $136,000, returning to the average sale price that the decade began with in 1990.  The trend toward purchasing upscale and luxury hotels is expected to continue over the next year.�

�This year, our analysis also includes details of some of the major portfolio sales,� adds Stephen Hennis, director of research for HVS International, who co-authored the study with Rushmore.  �The Transactions Survey also contains a summary of the major mergers and acquisitions of the year.�

The largest hotel portfolio in terms of total sale price in 1998 was the 12 luxury hotel package purchased by Host Marriott from the Blackstone Group for $1.5 billion.  However, the highest per-room price for a portfolio sale was paid by Starwood for the four unaffiliated luxury hotels that it placed in its St. Regis/Luxury Collection category.

Hotel purchases in 1998 were made by a diverse group of companies, including C-corps, investment banks, private entities, and REITs.  Leading the list of major buyers of hotels in 1998, based on dollars spent on acquisitions, is Host Marriott.  Other companies that spent a significant amount to purchase hotels in 1998 included MeriStar, Hilton, Strategic Hotel Capital, and Hospitality Properties Trust.

In addition to property acquisitions, hotel companies continued to grow by acquiring or merging with other companies.  REITs continued to use their strong stock prices at the beginning of 1998 to use as collateral in buying other companies.  However, at the end of 1998, falling stock prices diminished the buying power of many of the REITs.  C-corps were also a strong part of the merger and acquisition frenzy of 1998. 

�Merger activity is expected to taper in the near future,� adds Rushmore, � as fewer companies are available for takeovers or mergers.  Many of the new larger hotel companies are expected to sell off their non-core assets that do not correspond with their long-term goals and concentrate on the management of their newly acquired assets.�

Data for the 1998 Hotel Transactions Survey is collected as part of the Lodging DataBank by HVS International.  HVS is merely a conduit for the data, and assumes no responsibility or liability for its accuracy, usability, confidentiality, or other matters related to the survey.

HVS International was created in 1980 to satisfy the growing demand for reliable and well-documented hotel market studies and feasibility reports.  With ten offices worldwide, HVS offers a vast range of services including valuations, strategic analyses, development planning, litigation support, executive search, waste management, gaming and restaurant consulting, asset management, and operational and management strategy development.