Hotel Online
News for the Hospitality Executive

Hotel Capitalization Rates Continue to Strengthen,
According to USRC Hotel Investor Survey

By Jeffrey H. Walker, MAI, CHME
September 14, 2011 

Despite economic volatility, a roller-coaster stock market, and fears of a double-dip recession, the Mid Year 2011
USRC Hotel Investment Survey indicates that overall investment parameters for both limited-service and full-service hotels have continued to become more aggressive. And perhaps equally important, anticipation of future ADR growth, closely correlated to hotel profitability, continues to improve. The current Mid Year 2011 survey clearly reflects expectations that the recovery is underway and on solid footing, despite recent headlines. More specifically, full-service capitalization rates moved lower by 50 basis points to 7.9%, and discount rates for both full-service and limited-service hotels continued to decline. As yield requirements lessened, anticipated growth (reflected by ADR expectations) continued to increase, even beyond the very healthy movement we saw in the last two survey periods, Winter 2011 and Mid Year 2010.
Full-service discount rates are now at their lowest level in survey history. Remarkably, they are now 10 basis points lower than the previous record low seen in the Winter of 2007 survey, prior to the economic slowdown of early 2008, and of course the accelerated economic crisis which emerged in September 2008.
Perhaps the most meaningful underlying result of the survey is the improving ADR expectations. The last three surveys had seen gradual improvement from the negative ADR projections seen in the 2009 surveys. But current ADR growth expectations are the highest levels seen since prior to the economic crisis of 2008.
The complete survey, including data on capitalization rates, discount rates, ADR 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 early career with Hyatt Hotels and Resorts, and has been a hotel consultant since 1992. He is involved with hundreds of hotel analyses annually for national lenders and major institutional clients, and is a frequent speaker at national conventions. 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

 Receive Your Hospitality Industry Headlines via Email for Free! Subscribe Here  

To Learn More About Your News Being Published on Hotel-Online Inquire Here

Also See: Hotel Capitalization Rates Fall Further, According to USRC Hotel Investor Survey / Jeffrey H Walker / March 2011

Hotel Capitalization Rates Turn the Corner, According to USRC Hotel Investor Survey / Jeffrey H Walker / September 2010

Hotel Capitalization Rates Stabilize / Jeffrey H Walker / March 2010

To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch

Home | Welcome | Hospitality News
| Industry Resources

Please contact Hotel.Online with your comments and suggestions.