Co-Star - Investors are demonstrating confidence that the hotel sector is rebounding at midyear, shelling out large sums for marquee properties from Manhattan to Atlanta to San Francisco. Analysts believe the lodging market is entering one of those rare moments of equilibrium where both buyer and seller enjoy opportunities. The uptick in sales is occurring after the hospitality sector, hit by dramatic declines in revenue per available room (RevPAR), saw property sale prices crater like no other commercial property category. But now RevPAR declines are waning and hotel prices are starting to firm up after falling as much as 50% from their 2006-07 peaks. Investors seem intent on taking advantage of bottom-of-the-cycle prices to establish a foothold in the recovering market, although most properties are trading well below replacement costs and historical valuations. Sellers, meanwhile, are cashing in on the dearth of quality product on the market, improved borrowing conditions and the willingness of buyers to accept lower initial yields.
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