Hotel Online
News for the Hospitality Executive

Hotel Investor Survey - Winter 2009
Hotel Capitalization Rates Weaken Further
Expectations of Economic Fundamentals Also Fall

by:  Jeffrey H. Walker, MAI, CHME
February 20, 2009

The Winter 2009 USRC Hotel Investment Survey indicates that the increase in capitalization rates for both limited-service and full-service hotels has accelerated, with rates now at their highest levels in five years. Rates had been gradually increasing since record lows demonstrated in the 2007 surveys. Although the increase in discount rates was sharp compared to recent more gradual movement, there was still less movement in overall discount rates compared to going-in capitalization rates, which continue to be heavily impacted by slowing growth expectations in ADR. 

In fact, ADR growth expectation actually turned negative in the current survey, the first time this has occurred in survey history. With expense growth outpacing revenue growth expectations, NOI growth will remain challenged, leading to the reduction in the spread between the going-in capitalization rates and the discount rates in the survey results.

The direct capitalization rate for full-service hotels of 9.8% in the current survey is 160 basis points higher than the average for the Mid-Year 2008 survey.

The complete Winter 2009 survey, including data on capitalization rates, discount rates, income and expense growth expectations, marketing time, debt parameters, and other data for both full-service and limited-service hotels, can be ordered through the company’s website at, and clicking “Publications.”

Jeffrey H. Walker, MAI, CHME is Principal and Managing Director of US Realty Consultants. He is a 1985 graduate of James Madison University and has been involved in the hotel and restaurant industries since the 1970’s. He spent much of his career with Hyatt Hotels and Resorts, and has been a hotel consultant since 1992. He can be reached at 614-221-9494 (ext 150) or at


US Realty Consultants
Jeffrey H. Walker, MAI, CHME
Principal and Managing Director
492 South High Street
Suite 200
Columbus, Ohio 43215
Phone: 614-221-9494 ext 150


To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| One-on-One |
Viewpoint Forum | Industry Resources | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions.