There is a lack of good quality hotels for sale at a time where there is great buyer demand - by Earle Wason

As we near the summer and fall season it appears that many hotels, and resorts throughout New England will enjoy a very good year in 2017. Already those properties in winter destination resorts have experienced a much better winter season and many owners and operators have told me that again for the third year in a row the advanced deposits have grown.

As I predicted earlier this year there is a lack of good quality hotels for sale at a time where there is great buyer demand.  This could be for a number of reasons among them: Hotel owners are getting very good returns on their investment, so no need to sell.  Mr. Trump has indicated that he would like to reduce the Capital Gains tax so some potential sellers may be holding off to see if this comes to fruition. There are number of older hotels sold in the last boom that still have mortgage balances at or above the value of their properties.

Typically when the inventory of available hotels is low many companies will begin to look at building new.  The cost for new construction has increased significantly over the past three years but still new hotels will be built especially with the push for new brands.  There are so many brands now that it is impossible to know them all.  Hilton is now pushing its new Brand “Tru” and more Home2 Suites are under construction.  Choice is really making a strong effort to grow the Ascend Brand as “a collection of one of a kind upscale hotels”, Hyatt now includes: “Centric” and Andaz” and the list goes on. 

Many companies are now looking to find well-built 3 to 6 story hotels that can be purchased in the $60,000 to $70,000 a key range; followed by an remodeling and repositioning effort. Also another hotel segment to watch in 2017 is the continued growth of boutique hotels, both through new construction and redevelopment.  There are now some very good companies based in New England that are actively seeking opportunities and bring with them great business plans to improve or build properties with well-defined business models.

This year will be challenging for the brokerage community, however, using creative business strategies is paying off for our firm in activity, both closings and new assignments.  We are still looking forward to challenges that 2017 is presenting.

Earle Wason, CCIM, is the president and owner of Wason Associates Hospitality Real Estate Brokerage Group, Portsmouth, N.H.