Hotels in gateway cities have outperformed hotels in non-gateway cities, with hotels in gateway locations rising 10 percent in the past year, compared to 6 percent for those in non-gateway cities. Hotel operating performance scaled by price is still in the black based on economic value analysis (EVA), with returns continuing to exceed borrowing costs (for debt). Transaction volume strengthened both on a quarter-over-quarter and year-over-year basis. While our various pricing metrics point to continued positive price momentum for larger hotels at the expense of smaller hotels, we are concerned whether rising interest rates will put a damper on this momentum. A reading of our tea leaves suggests prices will continue to increase, but at a decelerating rate. This is report number 26 of the index series.