Hotels in gateway cities continue to shine, rising 15.3 percent year over year compared to 2.2 percent for hotels 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), and with the spread widening. This suggests that deals will be easier to pencil going forward, provided the current trend continues. With the Fed expected to continue to raise interest rates, however, the implication is that the return on invested capital must continue to increase as well. Transaction volume fell on a quarter-over-quarter basis, but rose on a year-over-year basis. While our various pricing metrics point to continued positive price momentum for large and small hotels, we continue to be concerned whether rising interest rates will put a damper on this momentum. A reading of our tea leaves suggests prices will moderate for large hotels but continue to increase for smaller hotels. This is report number 28 of the index series.