The price performance of hotels by region was worse this period than in the prior period, with only the Pacific and New England regions posting small single-digit gains. Hotels in non-gateway cities fared better than hotels in gateway cities, although the prices declined for hotels in both types of city. Transaction volume fell year over year but rallied quarter over quarter for both large and small hotels in gateway and non-gateway cities. Standardized prices of both large and small hotels continue to soften, indicating that investors should continue to keep their gunpowder dry. On the bright side, hotel debt financing continues to fall both on a quarter-to-quarter and year-over-year basis. In addition to this, the riskiness of hotels has narrowed relative to other major types of commercial real estate, although the delinquency rate on hotels rose imperceptibly this quarter. As in the prior period, the borrowing costs still exceed the return on hotels. Expect to see a faltering in the price of large hotels and an uptick in prices for small hotels next quarter, based on our leading indicators of hotel price performance. This is Volume 12, Issue 4, of the CREF Indices series.