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Hotel Capitalization Rates Flatten at Strong Levels,
According to USRC Hotel Investor Survey

By Jeffrey H. Walker, MAI, CHME
March 12, 2012

With continuing signs of ongoing economic recovery, the overall news in the Winter 2012 USRC Hotel Investment Survey remains positive. Overall investment parameters remain strong and expectations for revenue growth continue to exceed expense growth. However, overall investment parameters have settled in slightly less aggressively than in the Mid Year 2011 survey, when full-service discount rates were at their lowest level in survey history. More specifically, in the current survey, full-service capitalization rates moved higher by 20 basis points to 8.1%, up from 7.9% six months ago, but still strong by historical standards. As yield requirements remain low, anticipated revenue growth (reflected by ADR expectations) continues to exceed expense growth estimates, indicating continued expectations of NOI recovery.

We have stated in the past several surveys that we continue to note that the current investment environment is quite bifurcated, or split, as “A+” hotel assets have found favor among REIT/institutional investors and some lenders, while those less stable properties still have a more limited buyer pool and debt options. In general, the buyer pool and lending options for good quality hotels have expanded, even if they fall short of the A+ properties in primary coastal cities. But lending for value-added or turn-around properties remains scarce, as does investment appeal in general for these assets.
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

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Also See: Hotel Capitalization Rates Continue to Strengthen, According to USRC Hotel Investor Survey / Jeffrey H Walker / September 2011

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

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