American Hotel Real Estate Market Stays Red-Hot in 2006

While headlines are trumpeting a deflating of the housing real estate bubble, the market in hotel real estate continues to boom.

Jones Lang LaSalle Hotels, a hotel real estate management company, recently reported that through the first six months of 2006, the total volume of U.S. hotel sales of $10 million or more set a record of $21.8 billion. That surpasses the previous record for an entire year, $21 billion in 2005.

Many hotel buyers are flipping properties quickly to take advantage of the hot market. The Westin Michigan Avenue in Chicago, for example, was recently sold for $215 million after having been purchased for $137 million one year earlier.

Separately, the real estate investment firm Walton Street Capital recently announced plans to sell eight Marriott Renaissance hotels, including the Renaissance Mayflower in Washington that the firm purchased for $578 million just a year ago.

Added to those positives are “the return of the international traveler, growth in the group and convention business and a higher level of hotel brand awareness,” said Bjorn Hanson, a principal with PricewaterhouseCoopers’ leisure and hospitality practice.

Some observers think this pace can be maintained for quite a while.