Buyers See Limited Upside in Hotel Acquisitions

It’s hard to imagine how things can get much better for the U.S. hotel sector, and that can make it surprisingly difficult for investors to find acquisition deals that make sense.

“Right now, we are in the strongest occupancy environment ever recorded,” says Jan D. Freitag, senior vice president of lodging insights for research firm STR, based in Hendersonville, Tenn.

That’s great news, but many potential buyers of hotel properties now hesitate to assume that they can squeeze much more income out of new acquisitions because average occupancy rates are already so high. Many potential sellers are also hesitant. That’s because even if they can get a good price for a hotel property, after the transaction closes they may not be able to find another attractive property to buy.

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