Excess Takes Its Toll On Hotel Values

Worldwide—The average hotel in the United States was valued at US$100,000 per key in 2006. By next year, that value will have sunk to US$50,000 per room, according to a forecast by HVS International. To make matters worse for sellers, for the next 18 months, any transaction will most likely be done at a liquidation value because no one who does not have to sell will sell at these fire-sale prices. As a result, HVS Chairman Steve Rushmore suggests that the typical US$100,000 per key hotel in 2006 could very well sell at US$25,000 per key in the months ahead.

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