Large hotel sales continued to bump along the bottom in 2024, with volume falling 8% to the second-lowest annual total in a dozen years.
Last year had $13.27 billion of hotel sales worth $25 million or more, down from $14.37 billion in the prior year, according to Green Street’s Sales Comps Database. It was the third consecutive decline for the sector, following a 37% drop in 2023 and a 14% contraction in 2022.
Eastdil Secured was far and away the most active brokerage. It again took first place with $4.43 billion of hotel sales, up 62% year over year. JLL repeated in the No. 2 spot by brokering $1.49 billion, down 37%. Hodges Ward Elliott leapt back into the top five with $1.22 billion of deals, good for third place. CBRE took fourth with $945.8 million, down 53%, followed by Newmark with $613.7 million, down 36%.
Trading activity in the sector has been on a roller coaster since the onset of the pandemic kneecapped 2020 sales volume to lows not seen since the global financial crisis. For much of last year, uncertainty over inflation, interest rates and the outcome of the U.S. presidential election left both buyers and sellers hesitant to transact.
The year started with the lowest quarterly total since 2020, as just $1.35 billion changed hands. Activity improved in the second and third quarters — with each topping $4 billion — but then tumbled again in the final three months to $2.9 billion. But in that ebb and flow were deals that established pricing benchmarks to help pave the road toward recovery.
“The market [in 2024] experienced significant price discovery in a higher-for-longer interest-rate environment, and the acceptance of higher going-in and stabilized yields,” Eastdil managing director Louis Stervinou said. He noted that among the buyers that stepped up were several REITs, lodging-focused investment funds, private equity firms and private investors. In some cases, those players paired up with hotel brands with key money on strategic offerings.
With the election in the rearview mirror and more visibility on the course of interest rates and inflation, pros noted that at least some of the uncertainty that clouded the market has dissipated.
“Today, investors have far more clarity than they did … 12 months ago when it comes to making sales decisions and investment decisions,” said Kevin Davis, chief executive of JLL’s hotels and hospitality division in the Americas. “We’ve arrived at that mythical point we’ve been waiting on a long time.”
There’s also been signs of improvement on the debt side.
While the Federal Reserve hasn’t cut interest rates as quickly or deeply as anticipated, debt liquidity has continued to improve as more lenders return to the sector.
“Spreads have compressed, and there continues to be a lot of competition amongst lenders,” said Adam Etra, co-head of Newmark’s lodging capital-markets group. He noted that debt funds remain extremely active, while select banks and life companies are actively quoting deals, and the single borrower market is open for larger transactions. “Many of these lenders, in addition to the investors/equity players, are increasingly pushing to get capital out the door,” he added.
With that, brokers and buyers alike said they are cautiously upbeat that volume finally will start to improve this year, ending a two-year decline.
“It’s not unbridled optimism,” said Robert Webster, cohead of CBRE’s national hotel partners platform. “You need to have ownership balance-sheet stress to see more product clearing the bid. … There will probably be more of that coming down the road.”
That’s just what buyers are preparing for. “We anticipate a growing pipeline of investment opportunities as loan maturities and deferred capital expenditures mandated by brands drive more sellers to the market,” said Pranav Bhakta, vice president of investment operations at Coral Gables, Fla.-based Driftwood Capital. “With disciplined investment criteria and a clear view on leveraged returns, we remain well positioned to deploy capital strategically and expect 2025 to be a more active and accretive year for acquisitions.”
Indeed, brokers and buyers alike noted an uptick in new listings rolled out at last week’s Americas Lodging Investment Summit in Los Angeles, as opposed to relistings of deals that never found a buyer.
In 2024, it was mostly smaller deals that crossed the finish line, as 75% of trades were priced at $75 million or less. On average, hotels last year traded at $351,000/room — down slightly from the prior year’s $389,000/room average. The busiest markets were New York ($1.83 billion), Orlando ($1.16 billion), Phoenix ($1.03 billion) and Miami ($1.03 billion). No other markets topped the $1 billion threshold.
Eastdil led the brokerage race with a 43.8% market share, up from 27.9% a year ago, followed by JLL with a 14.8% share, down from 24.1%. Hodges Ward, which had slipped off the top brokers ranking in recent years, roared back with a 12.1% market share. Both CBRE (9.4% share) and Newmark (6.1% share) saw their market shares decline year over year.
Broker rankings are based on property transactions that closed in 2024 and involved full or partial stakes valued at $25 million or more. When multiple brokers shared a listing, the dollar credit was divided evenly, but each broker was credited with one transaction. Only brokers for sellers were given credit. Portfolio transactions were included if the package price was at least $25 million.
