We had reported earlier that buying of hotels which had hit a low in 2009 bounced back last year and is set to gather momentum this year. Real estate investment trusts or REIT are adding to the momentum with their aggressive participation in the acquisition market for hotels with their deep pockets. The most recent example is LaSalle Hotel Properties Inc. that already owns 35 upscale hotels acquired the Viceroy Santa Monica hotel on California’s coast for $80.1 million.
LaSalle has invested $596 million in a little over a year in acquiring seven upscale trophy hotels. Its latest acquisition, the 162 room Viceroy, initially attracted 10 bidders pushing the final price up to almost $494,000 per room for Viceroy Hotel Group who have owned and run the hotel since 2001. LaSalle has decided to retain them as managers for the property. The location of the property is just a block away from the beach and with strict regulations on new construction in Santa Monica it is definitely a prized possession for laSalle.
REITs like LaSalle, Host Hotels & Resorts Inc., Pebblebrook Hotel Trust, Chesapeake Lodging Trust, Sunstone Hotel Investors Inc. are involved individually or as part of a consortium in serious bidding for any high end US hotel that goes on the market. Almost half of the total investment in buying established hotels in the US has come from these REITs.