Sale Prices and Brands - Historical Trends in Hotel Sale Prices - By Hans Detlefsen and Scott Lewis

Introduction

Developers, lenders, investors, and public-sector clients sometimes seek advice from consultants about what brands are the best match for their hotel development goals. Which brands have maintained the highest values over time? Which brands offer the highest degree of consistency nationally? Which brands would be a good fit for a particular market? In this article, we evaluate historical transaction data in search of some evidence that may address, or partially address, these questions.

This study evaluates historical transaction volumes and sale prices within various hotel brands during the past four decades. The authors evaluated data from 11,519 hotel transactions dating back to 1970. Although the authors analyzed all of these transactions, we narrowed our research for this article to brands within the "upscale” and "upper-upscale" chain scales, as defined by Smith Travel Research. As such, the data set analyzed for this article includes 2,391 transactions that occurred between 1978 through 2009. Specifically, we included the following hotel brands in our analysis:

The comparative data indicates sale price trends for these brands. The historical sale price trends have been used to identify price variance. We also evaluated volatility in sale prices and transaction volume trends for these specific brands during the 31-year observation period. Sale prices, of course, can tell us something about the value of particular brands. Variance in sale prices can tell us something about the consistency of brands nationally. The historical sale prices and variance measures can both tell us something about whether particular brands could be a good fit for particular markets.