Hotels in non-gateway cities outperformed those in gateway cities for the first time since the first quarter of 2006. That said, overall hotel financial performance still stands at breakeven, with operating profit similar to a hotel property’s borrowing cost based on economic value analysis. Smaller hotels and hotels involved a repeated sale rose in price, while larger hotels continued their downward price spiral. The cost of hotel debt financing has declined, with a narrowing in the relative risk premium for hotels. A reading of our tea leaves suggests prices are expected to decline for both large and small hotels. This is report number 30 of the index series.