Pole Vaulting to New High

Abstract

Hotel prices continued to gain ground during the recent quarter, regaining losses incurred during the pandemic. Prices in all regions are reverting to their long-term average, with hotels in the Pacific and South Atlantic regions rising above their standardized average. Hotels in both gateway and non-gateway cities continue to exhibit positive performance, although hotels in the gateway cities have posted greater gains. For both large and small hotels, transaction volume increased both quarter over quarter and year over year. Our moving average trendlines indicate that large hotels are priced to buy, while small hotels represent an opportunistic buy at best. Large hotels reached a new statistical high based on our standardized unexpected price (SUP) performance metric. Mortgage financing volume rose, given that financing costs were lower this quarter. Among factors that have contributed to this situation are the facts that the relative risk premium remained stationary this quarter and that the hotel delinquency rate has continued to decline. Our economic value added (EVA) and our shareholder value added (SVA) are positive, indicating that hotel investment based on operating performance is currently financially feasible. Looking toward the next quarter, our leading indicators of hotel price performance indicate that positive price momentum should continue to exist for both large and small hotels.