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Sales Pick Up in New York City’s Hospitality Market in 2011

hospitality sales volume
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In line with the general commercial real estate market trend, the New York City hospitality sector saw a robust growth in 2011, with over $3.2 billion in sales. Sales were up 148% over 2010, and up by a whopping 524% over 2009. Moreover, 2011 saw the volume of sales reach a 5-year high. The figures indicate that the market is recovering from its recessionary lows and that hotels are among the most desired investment properties.

The average selling price per transaction reached $84 million in 2011, the highest value over the past 7 years. A significant contribution to this jump were large transactions like the sales of New York Palace, The Carlyle, Yotel New York and others.

New York City Hotel Sales Map
New York City 2011 Hotel Sales Map

There were 38 hotel sector transactions during the year, almost double compared to 2010 (see a map of 2011 hotel sales). Large transactions, of over $100 million, accounted for $2.3 billion in volume alone – 78% of total sales volume.

The median selling price per room, $207,511, dropped 23% compared to 2010. However, hotels like The Carlyle and New York Inn were sold at about $1.7 million per room. Here are the 5 biggest hotel transactions in New York City in 2011:

New York Palace
451 Madison Avenue, New York, NY 10022
Sale Price: $377,000,000
Sale Date: 07/12/2011
Boasting 813 guest rooms and 86 suites, the iconic New York Palace hotel on Madison Avenue sold for $377,000,000, or $419,000 per room, $23M lower than the initial $400M estimation.

Radisson Lexington
Radisson Lexington
Radisson Lexington
509 Lexington Avenue, New York, NY 10017
Sale Price: $333,700,000
Sale Date: 06/01/2011
The Radisson Lexington hotel sold for $333,700,000, not very far from the initial $335 million estimation. This translates into $468,000 per room for the hotel located on Lexington Avenue that was bought by DiamondRock Hospitality.
The Carlyle, A Rosewood Hotel
981 Madison Avenue, New York, NY 10075
Sale Price: $319,400,000
Sale Date: 07/29/2011
According to the New York Post, yearly cash flow at The Carlyle never dropped below $10M, even during the worst years of recession. This might explain the impressive $1.7M per room that was paid by the family of Hong Kong billionaire Cheng Yu-tung.
Yotel New York
560 10th Avenue, New York, NY 10036
Sale Price: $315,000,000
Sale Date: 05/26/2011
The New York Helmsley Hotel
214 East 42nd Street, New York, NY 10017
Sale Price: $313,500,000
Sale Date: 03/23/2011