Why Q4 may not be a ‘blowout’ for M&A | Hotel Investment Today
The biggest deal in 2024 so far is the sale of The Ritz-Carlton O’ahu, Turtle Bay in Hawaii for a whopping $680 million. This sale tops the charts in terms of price per key, making it a significant transaction in the world of hotels.
Looking ahead to the fourth quarter, experts are unsure if we’ll see a surge in mergers and acquisitions (M&A) activity as originally predicted. Despite rate cuts from the Federal Reserve, the market remains uncertain, and many hotels are struggling with operating cash flow issues.
Emmy Hise, a senior director of hospitality analytics at CoStar, believes that even with the Fed’s cuts, the fourth quarter may not see a significant boost in transaction activity. While there may be some uptick, especially for large trophy acquisitions or value-add properties, the overall uncertainty in the market could dampen expectations.
Chad Littell, the national director of US Capital Markets Analytics at CoStar, adds that while the Fed has cut rates, treasury yields have actually increased recently. This means that fixed-rate borrowing costs for commercial real estate have also gone up, which could impact deal volume in the near future.
Looking back at the top hotel deals through the third quarter of 2024, we see some impressive numbers. The Hyatt Regency Orlando, Arizona Biltmore, and The Ritz-Carlton O’ahu, Turtle Bay are among the highest-priced sales in the list. The Ritz-Carlton O’ahu, Turtle Bay takes the lead in price per key, showcasing the continued interest in luxury properties.
As we move into the final stretch of the year, it remains to be seen whether Q4 will be a ‘blowout’ quarter for M&A activity. Stay tuned for more updates on the evolving landscape of hotel investments and acquisitions in the coming months.
