In fact, hotel investment activity is at a five year high. Transaction volume, excluding strategic trades, reached an estimated $203 million during the first two quarters of 2003, compared to $87 million and $74 million reported for the same period in 2001 and 2002, respectively. More specifically, transaction volume as of year-to-date June 2003 surpassed the $185 million of transaction volume reported for the entire year in 2002. Pricing has also improved dramatically �increasing 52.5% between 2002 and 2003 (January to June), from $47,600 to $72,600 per room. 

Second quarter transactions illustrate the mix of product-types that sold in the last three months from small inns such as the 3-property Someplace(s) Different Inn Portfolio comprised of the Glenerin Inn, Hochelaga Inn and Idlewyld Inn (Mississauga, Kingston and London), which sold for $7.0 million ($78,600 per room) to downtown full-service assets such as the 459-room Renaissance Montreal Hotel, which sold for $29.95 million ($65,200 per room).

While there have been market deals with capitalization rates in the 12% to 13% range, such as the 160-room Best Western Village Park Inn (Calgary) and the 62-room Howard Johnson Hotel (Bowmanville), which sold for $12.7 million ($79,400 per room) and $2.89 million ($46,500 per room), respectively, other hotels have traded at relatively low capitalization rates, with the value based on a price per room. For instance, the 721-room Toronto Colony Hotel was acquired as a conversion opportunity for $67.0 million ($92,900 per room) and at a capitalization rate of 6.1%.

Looking forward, proven industry players will continue to drive transaction activity through the next two quarters with the help of low interest rates and the willingness of lenders and franchisors to work with existing and potential investors.  While year-to-date results are a reflection of investor sentiment pre-SARS, it is anticipated that transaction activity during the third and fourth quarters will remain strong based on the volume of assets under negotiation and the appetite for hotel product within the investment community. One of the main challenges will be the lack of available hotels for sale.
 

Public hotel investment companies have been significantly impacted by the recent events
affecting the lodging industry such as the Iraq War and SARS. For the second quarter of
2003, every public company on the stock list INNvestment is published quarterly by Colliers
International Hotels. Comments and suggestions are welcome, and can be directed to any office: below reported a decrease in performance with the exception of Accor which closed
25.9% higher than their 52-week high at 31.50.